A Portfolio Has an Actual Return of 15

question 32

Multiple Choice

A portfolio has an actual return of 15.17 percent, a beta of .93, and a standard deviation of 7.2 percent. The market return is 13.4 percent and the risk-free rate is 2.8 percent. What is the portfolio's Jensen's alpha?

• A) 2.25 percent
• B) 2.51 percent
• C) 2.67 percent
• D) 3.96 percent
• E) 4.04 percent

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Definitions:

Nature

The physical world collectively, including plants, animals, landscapes, and other features and products of the earth as opposed to humans or human creations.

Land Rent

Payment made for the use of land, typically based on its productivity, location, and the competitive demand for land use.

Acres

A unit of measurement used primarily in the U.S. to describe the size of land, equating to 43,560 square feet.

Economic Rents

Extra earnings or return above the normal expected return of an investment or economic activity.