-Which of These Four Funds Had the Largest Total Risk

question 32

Multiple Choice

$\begin{array}{llcl}\underline{\text { SD }} &\underline{ \text { Beta} }&\underline{\text { alpha }} &\underline{\mathrm{R}^{2}}\\\text { Fund 1 1.97 } & 1.0 & 1.3 & 0.95 \\\text { Fund 22.94 } & 0.8 & 0.6^{*} & 0.80 \\\text { Fund 33.82 } & 1.2 & -3.5 & 0.90 \\\text { Fund 44.70 } & 1.4 & 4.2 & 0.65\end{array}$

-Which of these four funds had the largest total risk?

• A)Fund 1
• B)Fund 2
• C)Fund 3
• D)Fund 4

Recognize the significance of call, sinking fund, and convertible features in bonds.

Understand the reasons behind bond ratings and their impact on investor perceptions and bond pricing.

Analyze the term structure of interest rates and its components.

Appreciate the effect of inflation on bond returns and the Fisher effect.

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Definitions:

Inflation Rate

The speed at which overall prices for goods and services increase, leading to a decrease in purchasing power.

Hourly Rate

The amount of money paid for one hour of work.

Equivalent

An item that holds the same worth, purpose, or significance as another within a given context.

Pay

The total money received by an employee from an employer as compensation for employment, including all bonuses and allowances.