Suppose Two Portfolios Have the Same Average Return and the Same

question 28

Multiple Choice

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

• A) is better than the performance of Raider Fund.
• B) is the same as the performance of Raider Fund.
• C) is poorer than the performance of Raider Fund.
• D) cannot be measured as there are no data on the alpha of the portfolio.

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Definitions:

Population Variance

The measure of the dispersion of all values in a population from the population mean.

Population Variance

A measure of the spread or dispersion within a set of data points in a population, indicating how much the data varies from the average.

Dog Food

A type of food specifically formulated and intended for consumption by dogs, made from various ingredients.

Forearm

The part of the arm between the wrist and the elbow.