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:
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