Homework Answers
Solution:
Alpha is the excess return generated over the market return and higher alpha is better.
Hence we can say that CAPM alpha is the earning return that is not explained by the exposure to the market as this return is excess than the market return.
Hence option A is correct
Option B , C , D and E are incorrect as these statement talks about data that has no impact on alpha
Add Answer to:
1. If your mutual fund manager generates returns that earn a statistically significant CAPM a, MUST...
Yes. It is a Multiple Choice Question. 1. If your mutual fund manager generates returns that...
Yes. It is a Multiple Choice Question.
1. If your mutual fund manager generates returns that earn a statistically significant CAPM a, MUST that manager be outperforming the market? (a) Yes, CAPM a means the asset is earning return that is not explained by exposure to the market (b) Yes, assuming you have enough data to generate reliable estimates of a and B (c) No, you will only find a significant CAPM a when you do not have a long...
a mutual fund manager expects her portfolio to earn a rate of return of 11 percent...
a mutual fund manager expects her portfolio to earn a rate of return of 11 percent this year. The beta of her portfolio is .8. If the rate of return available on risk-free assets is 4% and you expect the rate of return on the market portfolio to be 14%, should you invest in this mutual fund?
A mutual fund manager expects her portfolio to earn a rate of return of 11% this...
A mutual fund manager expects her portfolio to earn a rate of return of 11% this year. The beta of her portfolio is 0.9. The rate of return available on risk-free assets is 4% and you expect the rate of return on the market portfolio to be 14%. What expected rate of return would you demand before you would be willing to invest in this mutual fund? Expected Rate of Return: %
A mutual fund manager expects her portfolio to earn a rate of return of 9% this...
A mutual fund manager expects her portfolio to earn a rate of return of 9% this year. The beta of her portfolio is 0.8. If the rate of return available on risk free assets is 4% and you expect the rate of return on the market portfolio to be 11%. Should you invest in this mutual fund? Show your work. Suppose you want to create a portfolio with the same risk as the fund manager’s portfolio above, however you only...
A mutual fund manager expects her portfolio to earn a rate of return of 11% this...
A mutual fund manager expects her portfolio to earn a rate of return of 11% this year. The beta of her portfolio is 0.6. The rate of return available on risk-free assets is 4% and you expect the rate of return on the market portfolio to be 14%. What expected rate of return would you demand before you would be willing to invest in this mutual fund? (Do not round intermediate calculations. Enter your answer as a whole percent.)
1. A mutual fund house has four portfolio managers. Their performance statistics are given as bel...
1. A mutual fund house has four portfolio managers. Their performance statistics are given as below: ManagerAverage monthly return Standard Beta (compounded to annual basis) deviation 8% 1.2 2.2 0.6 1.6 1.0 10 7 3 4 SP500 The T-bill rate is 5% a What is the Treynor's performance measure for Manager B? (5 pts b) What is the Sharpe's performance measure for Manager C? (5 pts) c) What is the M2 performance measure for Manager D? (5 pts) d) For...
You don't need to be rich to buy a few shares in a mutual fund. The...
You don't need to be rich to buy a few shares in a mutual fund. The question is, how reliable are mutual funds as investments? This depends on the type of fund you buy. The following data are based on information taken from a mutual fund guide available in most libraries. A random sample of percentage annual returns for mutual funds holding stocks in aggressive-growth small companies is shown below. -1.2 14.1 41.7 17.6 -16.7 4.4 32.6 -7.3 16.2 2.8...
You don't need to be rich to buy a few shares in a mutual fund. The...
You don't need to be rich to buy a few shares in a mutual fund. The question is, how reliable are mutual funds as investments? This depends on the type of fund you buy. The following data are based on information taken from a mutual fund guide available in most libraries. A random sample of percentage annual returns for mutual funds holding stocks in aggressive-growth small companies is shown below. -1.8 14.4 41.9 17.9 -16.7 4.4 32.6 -7.3 16.2 2.8...
Jennifer is interested in the mutual fund RBC U.S. Index Fund – Series A. She has...
Jennifer is interested in the mutual fund RBC U.S.
Index Fund – Series A. She has a few questions for
you before she buys this investment.
a) Does the reported fund’s return include the Management
Expense Ratio (MER) ? Yes or No
b) What type of fee is charged: No-load, Front-end load or a
Back-end load?
c) Is the status of this mutual fund classified as a closed-end
or open-end mutual fund?
d) Based on your response in c), explain...
1. Analyze the major challanges USB faced in the last 5 years, in your opinion, what...
1. Analyze the major challanges USB faced in the last 5 years, in your opinion, what were the crucial factors in the banks downturn? 2. what are the main triggers to change the banks approach to communication and what is different today regarding the dealings and relationship to its share-and stakeholders? 3. How would you evaluate the constant replacement of the banks chairman and CEO? 4. in view of the future strategy of USB, what are your suggestions in order...
Yes. It is a Multiple Choice Question.
1. If your mutual fund manager generates returns that earn a statistically significant CAPM a, MUST that manager be outperforming the market? (a) Yes, CAPM a means the asset is earning return that is not explained by exposure to the market (b) Yes, assuming you have enough data to generate reliable estimates of a and B (c) No, you will only find a significant CAPM a when you do not have a long...
1. A mutual fund house has four portfolio managers. Their performance statistics are given as below: ManagerAverage monthly return Standard Beta (compounded to annual basis) deviation 8% 1.2 2.2 0.6 1.6 1.0 10 7 3 4 SP500 The T-bill rate is 5% a What is the Treynor's performance measure for Manager B? (5 pts b) What is the Sharpe's performance measure for Manager C? (5 pts) c) What is the M2 performance measure for Manager D? (5 pts) d) For...
You don't need to be rich to buy a few shares in a mutual fund. The question is, how reliable are mutual funds as investments? This depends on the type of fund you buy. The following data are based on information taken from a mutual fund guide available in most libraries. A random sample of percentage annual returns for mutual funds holding stocks in aggressive-growth small companies is shown below. -1.8 14.4 41.9 17.9 -16.7 4.4 32.6 -7.3 16.2 2.8...
Jennifer is interested in the mutual fund RBC U.S.
Index Fund – Series A. She has a few questions for
you before she buys this investment.
a) Does the reported fund’s return include the Management
Expense Ratio (MER) ? Yes or No
b) What type of fee is charged: No-load, Front-end load or a
Back-end load?
c) Is the status of this mutual fund classified as a closed-end
or open-end mutual fund?
d) Based on your response in c), explain...
Most questions answered within 3 hours.
-
Twenty students took a test. The average grade was 86 with a
standard deviation of 9....
asked 7 minutes ago -
NP complete problem:
Big project problem. To finish the big project, you need to
finish X...
asked 1 minute ago -
How much is the
multiplier?. Here are some facts about the economy of Inferior.
Marginal propensity...
asked 3 minutes ago -
What’s the allocation of the purchase price between newmont merger
goldcorp?
And does the merger adhere...
asked 3 minutes ago -
I am getting an error that the variable num was not declared in
the scope on...
asked 4 minutes ago -
Peroxyacetyl Nitrate (PAN) is formed by addition of NO2
to the corresponding peroxyacetyl radical. PAN is...
asked 8 minutes ago -
Suppose that at a large university 30% of students are involved
in intramural sports. If we...
asked 16 minutes ago -
Answer items 7 and 8 from the following information:
The mean for VO2max is 50 ml/kg/min...
asked 16 minutes ago -
The formation factor of a rock sample is 50. Calculate the
porosity if the sample is;...
asked 18 minutes ago -
If the anion in an insoluble salt is a conjugate base of a weak
acid, will...
asked 23 minutes ago -
2. The East Street Bagel Shop has a weekly demand for 3,500
bagels, which they make...
asked 39 minutes ago -
The purpose of this study was to
assess the vitamin D status of pregnant women residing...
asked 41 minutes ago