The Modigliani M2 Measure and the Treynor T2 Measure

question 58

Multiple Choice

The Modigliani M2 measure and the Treynor T2 measure

• A) are identical.
• B) are nearly identical and will rank portfolios the same way.
• C) are nearly identical, but might rank portfolios differently.
• D) are somewhat different; M2 can be used to rank portfolios, but T2 cannot.
• E) are somewhat different; T2 can be used to rank portfolios, but M2 cannot.

Understand the principles and characteristics of competitive price-taker markets.

Recognize the role of barriers to entry in shaping market competition.

Identify the dynamic nature of competition and its impact on consumer choice and business strategies.

Differentiate between price takers and price searchers in market contexts.

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Definitions:

Self-Serving Bias

A cognitive bias where individuals attribute positive outcomes to their own actions and negative outcomes to external factors, protecting self-esteem.

Scapegoat Theory

A social psychology concept that explains the tendency to blame someone else for one's own problems, often as a way of deflecting attention from one's own failures.

Outgroups

Any group with which an individual does not identify, often viewed oppositely to the in-group and sometimes subject to biases and stereotypes.

Salience

The quality of being particularly noticeable or important; the state at which something stands out from its background or context.