Assume That as a Portfolio Manager the Beta of Your $\quad \mathrm{RFR}=0.0625 \quad \quad \quad \quad \mathrm{R}_{\mathrm{m}}(\mathrm{proxy})=0.12$

question 66

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? 1) $\quad \mathrm{RFR}=0.0625 \quad \quad \quad \quad \mathrm{R}_{\mathrm{m}}(\mathrm{proxy}) =0.12$
2) $\quad \mathrm{R}_{\mathrm{K}}=0.078 \quad\quad \quad \quad \quad \quad \mathrm{P}_{\mathrm{m}}($ true $) =0.10$

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

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Definitions:

Alfred Adler

An Austrian medical doctor and psychotherapist known for founding the school of individual psychology, which emphasizes the uniqueness of the individual and the role of societal factors in shaping personality.

Insight Therapies

Psychological treatments that involve verbal interactions intended to enhance clients' self-knowledge and thus promote healthful changes in personality and behavior.

Biologically Controlled Responses

Processes or reactions in organisms that are naturally regulated by biological factors rather than environmental influences.