Suppose Two Portfolios Have the Same Average Return and the Same

question 39

Multiple Choice

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

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

---

Definitions:

Hedge Derivatives

Hedge derivatives are financial instruments used to reduce or mitigate the risk of adverse price movements in an asset, typically involving futures, options, and swaps.

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting its liquidity.