A Mutual Fund with a Beta of 1

question 64

Multiple Choice

A mutual fund with a beta of 1.1 has outperformed the S&P500 over the last 20 years.We know that this mutual fund manager _______________________.

• A) must have had superior stock selection ability
• B) must have had superior asset allocation ability
• C) must have had superior timing ability
• D) may or may not have outperformed the S&P500 on a risk adjusted basis

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Definitions:

Lawn Mowing

The act of cutting the grass in a lawn to maintain its appearance and health, typically using a lawn mower.

Usury

The practice of charging excessively high interest rates on loans, typically beyond the legal limit.

Maximum Interest Rate

The highest rate of interest that can be charged on a loan, as dictated by law or agreement.

Contractual Duty

An obligation either to do or refrain from doing something, as set forth in a contract.