QUESTION 18

1. Suppose two portfolios have the same average return and the same standard deviation of returns, but portfolio A has a higher beta than portfolio B. According to the Treynor measure, the performance of portfolio A

	A.	is the same as the performance of portfolio B.
	B.	is poorer than the performance of portfolio B.
	C.	is better than the performance of portfolio B.
	D.	cannot be measured as there are no data on the alpha of the portfolio.

1.82 points

QUESTION 19

1. In the PRS (Political Risk Services) financial risk ratings, the United States rates poorly because of the U.S. ________.

I. Large budget deficit

II. Large trade deficit

III. Large amount of total debt

	A.	I only
	B.	I and II only
	C.	I and III only
	D.	I, II, and III

1.82 points

QUESTION 20

1. Suppose two portfolios have the same average return and the same standard deviation of returns, but portfolio A has a higher beta than portfolio B. According to the Sharpe measure, the performance of portfolio A

	A.	cannot be measured as there are no data on the alpha of the portfolio.
	B.	is the same as the performance of portfolio B.
	C.	is poorer than the performance of portfolio B.
	D.	is better than the performance of portfolio B.

1.82 points

QUESTION 21

1. A portfolio managers five months rate of returns is as the following:

Month 1	Month 2	Month 3	Month 4	Month 5
5%	-3%	0%	-5%	10%

3. Whats the managers time-weighted return?

	A.	1.25%
	B.	10.14%
	C.	9.00%
	D.	5.10%

1.82 points

QUESTION 22

1. Suppose a U.S. investor wants to invest in a British firm currently selling for 50 per share. The investor has $7,000 to invest, and the current exchange rate is $1.40/. After 1 year, the exchange rate is $1.50/ and the share price is 45. How much of your dollar-denominated return is due to the currency change?

	A.	4.34%
	B.	10%
	C.	2.12%
	D.	6.43%