Exhibit 18-9
THE FOLLOWING INFORMATION IS FOR THE NEXT PROBLEM(S)

question 59

Multiple Choice

Exhibit 18-9
THE FOLLOWING INFORMATION IS FOR THE NEXT PROBLEM(S)
Consider the following information for four portfolios, the market and the risk free rate (RFR) $\begin{array}{|l|c|c|c|}\hline \text { ortfolio } & \text { Return } & \text { Beta } & \text { SD } \\\hline \text { A1 } & 0.15 & 1.25 & 0.182 \\\hline \text { A2 } & 0.1 & 0.9 & 0.223 \\\hline \text { A3 } & 0.12 & 1.1 & 0.138 \\\hline \text { A4 } & 0.08 & 0.8 & 0.125 \\\hline \text { Market } & 0.11 & 1 & 0.2 \\\hline \text { RFR } & 0.03 & 0 & 0 \\\hline\end{array}$
-Refer to Exhibit 18-9. Calculate the Jensen alpha Measure for each portfolio.

• A) A1 = 0.014, A2 = -0.002, A3 = 0.002, A4 = -0.02
• B) A1 = 0.002, A2 = -0.02, A3 = 0.002, A4 = -0.014
• C) A1 = 0.02, A2 = -0.002, A3 = 0.002, A4 = -0.014
• D) A1 = 0.02, A2 = -0.002, A3 = 0.02, A4 = -0.14
• E) None of the above.

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Definitions:

Simultaneous Game

A strategic interaction where all participants make decisions or moves at the same time without knowledge of the others' choices.

Best Response

In game theory, the strategy that yields the highest payoff for a player, given the strategies chosen by other players.

Simultaneous Game

A strategic game in which all players make their moves at the same time, without knowledge of the other players' actions.

Nash Equilibrium

A concept within game theory where no participant can gain by a unilateral change of strategy if the strategies of the others remain unchanged.