The Risk Free Rate, Average Returns, Standard Deviations and Betas

question 2

Multiple Choice

The risk free rate, average returns, standard deviations and betas for three funds and the S&P500 are given below.
-What is the M² measure for portfolio B?

• A) 0.43%
• B) 1.25%
• C) 1.77%
• D) 1.43%

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Definitions:

Bad Debt Expense

The expense recognized when receivables are no longer collectible, reflecting estimated losses from extending credit.

Percentage Rate

A proportion, often expressed as a percent, used to determine the interest to be charged or paid on a financial instrument or the growth rate of an investment.

Reported Earnings

The income stated in a company's financial statements, reflecting the company's performance over a specified period, typically a fiscal quarter or year.

Contra-Asset Account

A contra-asset account is an account used in a company's balance sheet to offset the balance of an associated asset account, reducing the net amount of both accounts.