Suppose Two Portfolios Have the Same Average Return and the Same

question 12

Multiple Choice

Suppose two portfolios have the same average return and the same standard deviation of returns, but portfolio A has a higher beta than portfolio B. According to the Treynor measure, the performance of portfolio A

• A) is better than the performance of portfolio B.
• B) is the same as the performance of portfolio B.
• C) is poorer than the performance of portfolio B.
• D) cannot be measured as there are no data on the alpha of the portfolio.
• E) None of the options are correct.

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Definitions:

Object Permanence

The knowledge that an object exists even when it is not in sight.

Piaget

A reference to Jean Piaget, a psychologist known for his work on child development and cognitive theory.

Conservation

In Piaget’s Theory the ability to understand that simply changing the appearance of an object does not change the object’s nature.

Climacteric

A phase in the aging process of humans during which there is a gradual decline in reproductive capacity and possibly the onset of other physiological changes.