7. Calculating a beta coefficient for a portfolio Grotesque Electric Is a public company, and Electric Fund is a relatively well-diversified mutual fund. The following two graphs show regressions for the market's historic realized returns versus historic realized returns on Grotesque Electric and Electric Fund. Graph A Graph B HISTORIC REALIZED RETURNS HISTORIC REALIZED RETURNS 2014 2014 10% 10% O . -10% o -20% -20% -10% : 10% 20 HISTORIC REALIZED RETURNS ON THE MARKET (Percenti 10% 20% HISTORIC REALIZED RETURNS ON THE MARKET Percent O O Oo -10% -105 ooo 20% -20% What institution is most accurately represented on graph B? Grotesque Electric Electric Fund Which of the following measures the excess or abnormal return produced by a portfolio over and above the return expected from the portfolio's beta and the risk-free and market rates of return? Sharpe's reward-to-variability ratio Treynor's reward-to-volatility ratio Jensen's alpha The following table reports some of the regression results for Grotesque Electric and Electric Fund Regression Coefficient Probability of Statistic Lower 95% Confidence Interval Upper 95% Confidence Interval Statistic 0.00 0.93 -0.02 -0.09 9.71 0.02 2.01 1.32 0.00 Institution Grotesque Electric Intercept Slope (beta) Electric Fund Intercept Slope (beta) 1.66 0.01 0.70 0.49 0.00 0.00 1.20 1.09 21.10 1.32 0.00 Which of the following statements are consistent with the data for Grotesque Electric? Check all that apply. There is a 95% probability that the true beta is between -0.02 and 0.02 The probability that the true beta is equal to zero is virtually nonexistant, There is a 95% probability that the true beta is between 1.32 and 2.01 The estimate for the beta for Grotesque Electric is precise