Portfolio C Has an Ex Post Alpha of +1

question 19

Multiple Choice

Portfolio C has an ex post alpha of +1.7 and the slope of the SML is 2.4. This means the reward-to-volatility ratio for Portfolio C will be

• A) between 1.7 and 2.4.
• B) also 1.7.
• C) less than 2.4.
• D) greater than 2.4.

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Definitions:

Audit Trail

A record that traces the detailed transactions and operations that affect a particular operation or event, widely used for verification and accounting purposes.

Severe Consequences

Significant negative outcomes or effects that result from a particular action or decision.

Organizational Objectives

Specific goals that a company or institution aims to achieve, which guide its operations and strategic planning.

Expediting

The practice of ensuring speedy delivery of goods or completion of tasks, often by prioritizing and streamlining processes.