Question: A portfolio manager boasted that his portfolio earned a return of 28% while the general market returned only 10% over that same period. He claims

A portfolio manager boasted that his portfolio earned a return of 28% while the general market returned only 10% over that same period. He claims superior analytical abilities and is requesting a raise from you, his supervisor. How should you respond? You should examine the securities in his portfolio. If he is investing in high -beta stocks (i.e., > 1.0), he should be earning more than the general market since he is exposing your firm to more risk. True or false?

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