True of False? 8. According to Jensen, the stock is undervalued. 9. Fama's net selectivity for the
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8. According to Jensen, the stock is undervalued. 9. Fama's net selectivity for the stock about < 0%. 10. According to Fama, the stock is overvalued. 11. The allocation effect < 1% if the actual weight of stocks is 60%, the actual weight of bonds is 40%, the benchmark weight of stocks is 50%, the benchmark weight of bonds is 50%, the benchmark return on stocks is 12% and the benchmark return on bonds is 6%. 12. Using the information in #11 and assuming the actual return on stocks is 10% and the actual return on bonds is 4%, the selection effect <0%. 13. If you invest $1000 today and receive $250 annually for 5 years, the MWRR < 9%. 14. If returns are 9%, 19%, -11% and 22%, the DWRR > 10%. 15. It is fair to say that the Treynor measure ignores unsystematic risk. 16. The dollar-weighted rate of return is considered better than the time- weighted rate of return for evaluating a manager's performance. 17. "Normal portfolios" are those without any specific style or customization. 18. It is fair to say that the Sharpe S method reflects absolute performance. 19. A drawdown of 20% would be considered better than one of 15%. 20. Beta for the S&P 500 is closer to 1 than to 2. O o o O 8. According to Jensen, the stock is undervalued. 9. Fama's net selectivity for the stock about < 0%. 10. According to Fama, the stock is overvalued. 11. The allocation effect < 1% if the actual weight of stocks is 60%, the actual weight of bonds is 40%, the benchmark weight of stocks is 50%, the benchmark weight of bonds is 50%, the benchmark return on stocks is 12% and the benchmark return on bonds is 6%. 12. Using the information in #11 and assuming the actual return on stocks is 10% and the actual return on bonds is 4%, the selection effect <0%. 13. If you invest $1000 today and receive $250 annually for 5 years, the MWRR < 9%. 14. If returns are 9%, 19%, -11% and 22%, the DWRR > 10%. 15. It is fair to say that the Treynor measure ignores unsystematic risk. 16. The dollar-weighted rate of return is considered better than the time- weighted rate of return for evaluating a manager's performance. 17. "Normal portfolios" are those without any specific style or customization. 18. It is fair to say that the Sharpe S method reflects absolute performance. 19. A drawdown of 20% would be considered better than one of 15%. 20. Beta for the S&P 500 is closer to 1 than to 2. O o o O
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TRUE Undervalued stocks or securities are equity shares that have a market value lower tha... View the full answer
Related Book For
Principles of Corporate Finance
ISBN: 978-0077404895
10th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen
Posted Date:
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