-Refer to Exhibit 2-2

question 86

Multiple Choice

-Refer to Exhibit 2-2.If PPF₂ is the relevant production possibilities frontier,then point __________ illustrates productive inefficiency.

• A) A
• B) B
• C) C
• D) J
• E) a,b,or c

---

Definitions:

CAPM

The Capital Asset Pricing Model, a theory used to determine the expected return on investment by correlating the risk and the non-diversifiable risk of the market.

Treynor Measures

A performance metric that assesses the returns earned on a portfolio in excess of the risk-free rate, adjusted for market risk.

Sharpe

A ratio used to calculate the risk-adjusted return of an investment, comparing the excess return of the investment to its standard deviation of returns.

Jensen Portfolio Performance Measures

A performance measurement method that evaluates the risk-adjusted return of an investment portfolio by comparing it to the expected return.