1. Rocco's portfolio returned 9.32% last year when the market returned 11.24%. The risk-free rate was 6.01% and the β for his portfolio as 1.09. From this scenario, we would conclude that:
    1. Rocco's portfolio was overvalued.
    2. Rocco's portfolio was undervalued and added alpha.
    3. There are insufficient data to draw a conclusion.
    4. The forecast return and the required return on Rocco's portfolio are equal.
  2. All of the following terms are associated with technical analysis, EXCEPT:
    1. Advance/Decline Line.
    2. Quick Ratio.
    3. Head and shoulders.
    4. Candlestick charting.
  3. Examples of expansionary monetary policy include all of the following, except:
    1. lowering reserve requirements.
    2. FOMC purchase of government securities.
    3. Increased government spending.
    4. Decrease in the discount rate.
  4. The creation of the investment policy statement forms the basis for:
    1. Strategic asset allocation.
    2. Tactical asset allocation.
    3. Rebalancing.
    4. All of the foregoing.
  5. The Sharpe and Treynor ratios have all of the following in common, except:
    1. They measure risk-adjusted performance.
    2. They use total risk in the denominator.
    3. They may be used to evaluate individual securities as well as portfolios.
    4. The greater the ratios, the greater degree to which the performance is worth the risk.
  6. All of the following statements accurately describe the attributes of a benchmark, except:
    1. Unambiguous.
    2. Efficient.
    3. Measurable.
    4. Investable.

Review Questions 13 - 18

Related Articles
  1. Financial Advisor

    Measure Your Portfolio's Performance

    Learn three ratios that will help you evaluate your investment returns.
  2. Investing

    5 Ways To Rate Your Portfolio Manager

    Investopedia explains: These five performance ratios will help you measure how good your money manager is at increasing the value of your portfolio.
  3. Investing

    Treynor Ratio: Is the Risk Worth Your Return?

    The Treynor ratio measures returns in excess of what could have been earned on a riskless investment per unit of market risk.
  4. Investing

    How To Measure Your Portfolio’s Performance

    The first tool for assessing portfolio performance while considering risk was the Treynor measure.
  5. Personal Finance

    Get A Career In Showbiz Accounting

    An accounting career doesn't have to be boring. If you love numbers, but want excitement as well, consider the field of showbiz accounting.
  6. Investing

    More Ways to Evaluate Portfolio Performance

    The Jensen measure is another tool investors use to include risk when measuring portfolio performance.
  7. Investing

    Understanding The Sharpe Ratio

    This simple ratio will tell you how much that extra return is really worth.
  8. Investing

    Explaining Risk-Adjusted Return

    Risk-adjusted return is a measurement of risk for an investment or portfolio.
  9. Investing

    3 Ways To Evaluate the Performance of Alternatives

    Learn about three ways to measure the performance of alternative investments. See how the commonly used Sharpe ratio has drawbacks in measuring volatility.
  10. Financial Advisor

    What an Investment Policy Statement Looks Like

    The anatomy of an Investment Policy Statement.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center