The Average Returns, Standard Deviations and Betas for Three Funds

question 8

Multiple Choice

The average returns, standard deviations and betas for three funds are given below along with data for the S&P 500 index. The risk free return during the sample period is 6%.
-You wish to evaluate the three mutual funds using the Jensen measure for performance evaluation.The fund with the highest Jensen measure of performance is __________.

• A) Fund A
• B) Fund B
• C) Fund C
• D) S&P500

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Definitions:

Variable Cost

Expenses that vary in relation to the amount of product or service generated by a company.

Sales Price

The final amount of money charged for a product or service, or the value that consumers are willing to pay.

Optimal Point

The most favorable position or condition that yields the maximum benefit or efficiency in a given situation, such as in investment or production.

Credit Policy

Rules a business adheres to for assessing a customer's eligibility for credit and the stipulations under which it is offered.