Question: Question 14 The table below gives performance forecasts for two famous hedge funds: Black Rock and Paulson. It also shows the expected market return and

Question 14

The table below gives performance forecasts for two famous hedge funds: Black Rock and Paulson. It also shows the expected market return and the risk free rate.

Black Rock Paulson Market Risk free
Expected Return 30% 20% 10% 1%
Standard Deviation 60% 24% 10% 0
Beta 4 2 1 0

Which fund is expected to perform the best relative to the CAPM?

a.

Black Rock because it has a very large expected return
b.

Black Rock because it has the highest alpha
c.

Black Rock because it has a large beta
d.

Paulson because it has the highest alpha
e.

Both funds are expected to perform equally well

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

The table below gives performance forecasts for two famous hedge funds: Black Rock and Paulson. It also shows the expected market return and the risk free rate. Black Rock Paulson Market Risk free...

Q:

Hi tutor, this question is a Financial Market (MAF653) courses. Please help me. Thank you so much. DEC-18 QUESTION 1 A. Ariff was looking for suitable investment to be invested. After went through...

Q:

JUUSULW.ICUSCI Abstract Brooks Hamilton recently completed his third year in college and has just started a summer internship at a prestigious Wall Street investment firm. The investment firm is very...

Q:

Several questions are associated with the following case study The directors of Dumbbell PLC (a clothing retailer) are considering rival offers from two firms wishing to take them over. The...

Q:

refer to the ..attachments. 30. True or False. Briefly explain. (a) The capital asset pricing model assumes that all investors have the same information and are willing to hold the market portfolio....

Q:

give correct only678 16. Consider three stocks: Q. R and S. Beta STD (annual) Forecast for Nov 2008 Dividend Stock Price Q 0.45 35% $0.50 $45 R 1.45 10% 0 $75 S -0.20 40% $1.00 $20 33 2008, Andrew W....

Q:

Drillmaster Sdn Bhd has developed a powerful new hand drill that would be used for woodwork and carpentry activities. It would cost $1 million to buy the equipment necessary to manufacture the...

Q:

I need my powerpoint draft edited to ensure all the requirement of the assignment are answered and clearly noted in this powerpoint. I have attached the current Powerepoint draft, the...

Q:

can you help me to finished the assignment 2? Southern Cross University Business School ACC00152 Business Finance Unit Information Guide Session 1 2011 Contents Contacts and MySCU...

Q:

Corporate Finance Marriott Corporation: The Cost of Capital Questions 1. Estimate the weighted average cost of capital ( WACC ) for Marriott Corporation (at its target capital structure)? Justify...

Q:

Explain why capacity utilization in a supplying division is such an important consideration when choosing a transfer pricing policy.

Q:

what's the structure model of y (t), and also determine the correlation and expected value of y (t) y (t) A (Ay(t-3) + e(t-2)) + Ae(t- 1) + e(t) %3D

Q:

Question 2 0 ( 2 points ) 4 ) ListenRosa owns a duplex and rents both units to tenants. Which one of the following expenditures is NOT an expense deductible in full for the 2 0 2 2 year for income...

Q:

What does sue 2 0 1 0 considered to be micro assault?

Q:

What proportion of the 4 percent of revenue that Greener has available should be allocated to base pay increases versus variable pay? Justify your decision.

Q:

What are the pros and cons of providing even increases in base pay to all Greener staff?

Q:

What recommendations would you have for Raj on how to communicate with Greener employees about the changes to their base pay and/or variable pay?