Exam 3

Question 1 1.
The __________ the proportion of total return that is in the form of price appreciation, the __________ will be the value of the tax-deferral option for taxable investors.
Answer
| | greater, greater | | | greater, lower | | | lower, greater | | | cannot tell from the information given. | | | None of these is true. |
3.03 points
Question 2 1.
Which of the following are not true regarding the Treynor-Black model?
Answer
| | considers both macroeconomic and microeconomic risks. | | | considers security selection only. | | | is nearly impossible to implement. | | | considers both macroeconomic and microeconomic risks and is nearly impossible to implement. | | | considers security selection only and is nearly impossible to implement. |
3.03 points
Question 3 1.
In measuring the comparative performance of different fund managers, the preferred method of calculating rate of return is __________.
Answer
| | internal rate of return | | | arithmetic average | | | dollar-weighted | | | time-weighted | | | None of these is correct |
3.03 points
Question 4 1.
Active portfolio management consists of __________.
Answer
| | market timing | | | security analysis | | | indexing | | | market timing and security analysis | | | None of these is true. |
3.03 points
Question 5 1.
The M2 measure was developed by
Answer
| | Merton and Miller. | | | Miller and Miller. | | | Modigliani and Miller. | | | Modigliani and Modigliani. | | | the M&M Mars Company. |
3.03 points
Question 6 1.
Suppose two portfolios have the same average return, the same standard deviation of returns, but portfolio A has a lower beta than portfolio B. According to the Treynor measure, the performance of portfolio A __________.
Answer
| | is better than the performance of portfolio B | | | is the same as the performance