Question

doud 22. Excess return portfolio performance measures Adjust portfolio risk to match benchmark risk. Compare portfolio returns to expected returns under CAPM. Evaluate portfolio performance on the basis of return per unit of risk. Indicate historic average differential return per unit of historic variability of differential return. None of the above. 23 An example of a market cap weighted stock market indicator series is the a. Dow Jones Industrial Average. b. Nikkei Dow Jones Average. c. S&P 500 Index. d. Value Line Index. e. Invesco S&P 500 Equal weight. 24. The measure of performance which divides the portfolio's risk premium by the portfolio's beta is the Sharpe measure. Jensen measure. Fama measure. Alternative components model (MCV). Treynor measure. 25. Which of the following is correct? If estimated value > Market price, you should buy. If estimated value > Market price, you should sell. If estimated value < Market price, you should sell. d. If estimated value < Market price, you should buy. e. Choices a and c. a. 26. Growth rates of the (1) labor force, (2) average number of hours worked and (3) labor productivity are the main determinants of a foreign country's Dividend payout ratio. Beta. Real risk free rate. Nominal risk free rate. Risk premium

Answer 1

The answer are indicated through bold and italics letters. 22) the excess returns portfolio performance measures compare portfolio returns to expected returns under CAPM the correct answer is option b since jensen model measures the return earned by the portfolio which is in excess of that mandated by CAPM model the portfolio risk premium by portfolio beta is thereby helps in determining whether the fund is undervalued or overvalued. 23) An example of a market cap weighted stock market indicator series is the S & P 500 index the correct answer is option c since it is a stock market index whose components are weighted according to total market value of their outstanding shares, the impact individuals stock price change has on the index is directly proportional with the respective companies total market value. 24) the measure of performance which divides portfolio risk premium by portfolio beta is Treynor measure the correct option is e because it measures the reward I.e., risk premium earned per unit of non diversifiable risk and is hence the beta of rates of return.   25) the following is correct choice a & c I.e., if estimated value is > market price you should buy because it is available cheaper in the market as it is undervalued which is good for a buyer and when estimated value is < market price you should sell as it is overvalued in the market it will give high returns to the seller . 26) growth rates of labour force,labor productivity & average no of hours worked are the determidetes of a foreign countries risk premium the correct answer is option e because all the above factors come under country specific risk which determines the political and economic stability and conditions of the foreign country and helps in decision making whether to invest or not in a particular country, higher the country risk greater risk premium is demanded .