Karen Is Trying to Assess Whether She Can Start Her

question 103

Multiple Choice

Karen is trying to assess whether she can start her own small business. But, as with many small businesses, money is a problem. She asks for your help. You indicate that the most likely source of money for starting up a small business is

• A) family investment.
• B) lottery winnings.
• C) banks.
• D) credit unions.
• E) personal savings.

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Definitions:

Benchmark Risk

The risk associated with not being able to meet or exceed the performance of a benchmark index or standard.

Treynor-Black Portfolio

A portfolio optimization model that blends a passive (market index) portfolio and an actively managed portfolio to achieve superior returns.

Sharpe Measure

A ratio used to evaluate the risk-adjusted return of an investment portfolio, by comparing its excess returns to the volatility of those returns.

Active Portfolio Managers

Investment professionals who make regular buy, hold, and sell decisions in an attempt to outperform standard benchmarks.