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Ch 9 Questions
Investments
| Question | Answer |
|---|---|
| Returns from funds that are weighted differently to different asset classes and sectors are known as | allocation effects |
| A larger Treynor Index, when compared to another portfolio's Treynor Index, generally indicates | better performance |
| All of the following are common techniques for measuring portfolio performance EXCEPT | Treynor Index?? |
| A measure that takes into account excess return relative to the total risk taken is known as | Jensen's alpha?? |
| The measure that describes the difference between the return of the capital asset pricing model and the actual return is known as | β (beta)?? |
| With respect to the concept of attribution analysis, what are the two ways to beat market returns? | Market timing and allocation?? |
| Returns from funds with different objectives are | comparable?? |
| The ability to adequately assess security selection is done by comparing | properly weighted allocations for the portfolio and benchmark?? |
| If an investment manager calculates the selection effect for a portfolio as 0.75, what is the most reasonable conclusion? | Seventy-five percent of the fund was misallocated?? |
| The act of overweighting and underweighting different sectors or categories in a portfolio is called | sector rotation strategy |
| Attempting to outperform a benchmark or market by buying and selling investments is called | an active investment strategy |
| To adequately compare returns, an investor must | find innovative ways of comparing new investments as they hit the market?? |
| The evaluation of how portfolio management decisions seek to outperform a benchmark is known as | attribution analysis |
| When an investor holds a diversified combination of assets over a long time period in order to match a benchmark, it is called a(n) | passive investment strategy |
| After obtaining the return and category for investment comparison, the two most common ways to compare the funds are by | rank and average |
| A larger Sharpe ratio, when compared to another portfolio's Sharpe ratio, is | interpreted differently, depending on whether the portfolio is in a rising or declining market |
| When an investor attempts to associate asset purchases prior to a bull market and selling investments prior to a bear market, this is called | market timing |
| A measure that takes into account excess return relative to systematic risk is known as | the Treynor Index |
| If a portfolio has higher returns with a 60%/40% stocks-to-bonds allocation versus a 75%/25% allocation, this is known as a(n) | allocation effect |
| When using the typical models, such as the capital asset pricing model, the market return Rm proxy is generally the | S&P 500 Index |
Created by:
Khall1229