Investment Theory and Portfolio Development - Review Questions 7 - 12
- 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:
- Rocco's portfolio was overvalued.
- Rocco's portfolio was undervalued and added alpha.
- There are insufficient data to draw a conclusion.
- The forecast return and the required return on Rocco's portfolio are equal.
- All of the following terms are associated with technical analysis, EXCEPT:
- Advance/Decline Line.
- Quick Ratio.
- Head and shoulders.
- Candlestick charting.
- Examples of expansionary monetary policy include all of the following, except:
- lowering reserve requirements.
- FOMC purchase of government securities.
- Increased government spending.
- Decrease in the discount rate.
- The creation of the investment policy statement forms the basis for:
- Strategic asset allocation.
- Tactical asset allocation.
- All of the foregoing.
- The Sharpe and Treynor ratios have all of the following in common, except:
- They measure risk-adjusted performance.
- They use total risk in the denominator.
- They may be used to evaluate individual securities as well as portfolios.
- The greater the ratios, the greater degree to which the performance is worth the risk.
- All of the following statements accurately describe the attributes of a benchmark, except:
InvestingLearn three ratios that will help you evaluate your investment returns.
Active Trading FundamentalsInvestopedia explains: These five performance ratios will help you measure how good your money manager is at increasing the value of your portfolio.
Fundamental AnalysisThe Treynor ratio measures returns in excess of what could have been earned on a riskless investment per unit of market risk.
Investing BasicsWhat is an investment benchmark and how is it used to evaluate the risk and return in a portfolio.
Fundamental AnalysisThe first tool for assessing portfolio performance while considering risk was the Treynor measure.
Investing BasicsMinimizing risk while maximizing return is any investor's prime goal. The right mix of securities is the key to achieving your optimal asset allocation.
Personal FinanceHow to select and build a benchmark to measure the performance of your investment portfolio
ProfessionalsReview Questions 13 - 18
ProfessionalsFINRA/NASAA Series 66: Section 2 Other Terms. This section discusses measures of portfolio return: risk premium, expected return and benchmark portfolios.
The Sharpe Ratio is a measure for calculating risk-adjusted return, ...
A measure of risk-adjusted performance of an investment portfolio. ...
A ratio developed by Jack Treynor that measures returns earned ...
A portfolio strategy that involves setting target allocations ...
The monetary return experienced by a holder of a portfolio. Portfolio ...
A concept that refines an investment's return by measuring how ...
Understand the difference between two methods of evaluating portfolio returns on investment, the Sharpe ratio and the Treynor ... Read Answer >>
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Use alpha and the Sharpe ratio to evaluate mutual funds by comparing their risk-adjusted returns. Learn what modern portfolio ... Read Answer >>
Understand how the Sharpe ratio is calculated, and its significance and use for investors in evaluating the performance of ... Read Answer >>
Learn how the information ratio is calculated as a risk-adjusted measure of performance, and understand how it seeks to differentiate ... Read Answer >>