Assume That as a Portfolio Manager the Beta of Your

question 43

Multiple Choice

Assume that as a portfolio manager the beta of your portfolio is 1.15 and that your performance is exactly on target with the SML data under condition 1. If the true SML data is given by condition 2, how much does your performance differ from the true SML?

• A) 2.53 percent lower
• B) 3.85 percent lower
• C) 2.53 percent higher
• D) 4.4 percent higher
• E) 3.85 percent higher

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Definitions:

Syntax

The set of rules, principles, and processes that govern the structure of sentences in a given language, especially the order of words.

Two-Word Phrases

Pairs of words combined to create a specific meaning or concept, often used in linguistics and study of syntax.

Gestalt Principle

A theory in psychology that proposes the human brain organizes visual elements into whole objects rather than the sum of separate parts.

Similarity

a principle in psychology and various sciences that objects or patterns that are similar to each other are more likely to be grouped together by the perception system.