Question 1

Sharp performance measures of a stock will be close to the Capital Market Line over time.

Accepted Answer

A) True 
 B)False

Question 2

Over the past 4 years an investment returned 8%, 25%, 10%, and 15%. The compound annual return was

Accepted Answer

A)  14.3% 
B)  14.5% 
C)  15.1% 
D)  15.5% 
A)  14.3% 
B)  14.5% 
C)  15.1% 
D)  15.5%

Question 3

Over the past 4 years an investment returned 8%, -25%, 10%, and -15%. The compound annual return was

Accepted Answer

A)  -9.1% 
B)  -7.3% 
C)  3.5% 
D)  5.6% 
A)  -9.1% 
B)  -7.3% 
C)  3.5% 
D)  5.6%

Question 4

The denominator of the Treynor performance measure is

Accepted Answer

A)  sigma. 
B)  delta. 
C)  the variance. 
D)  beta. 
A)  sigma. 
B)  delta. 
C)  the variance. 
D)  beta.

Question 5

CFA Institute bond returns calculations considers accrual accounting which means

Accepted Answer

A)  bond default losses will accrue over future years. 
B)  bond interest income accrues daily interest to the investor. 
C)  bond discount is accrued over the term to maturity. 
D)  interest is only recognized when it is paid. 
A)  bond default losses will accrue over future years. 
B)  bond interest income accrues daily interest to the investor. 
C)  bond discount is accrued over the term to maturity. 
D)  interest is only recognized when it is paid.

Question 6

The risk-adjusted performance of a single security should be measured using

Accepted Answer

A)  the Sharpe measure. 
B)  the Treynor measure. 
C)  the harmonic mean return. 
D)  the arithmetic mean return. 
A)  the Sharpe measure. 
B)  the Treynor measure. 
C)  the harmonic mean return. 
D)  the arithmetic mean return.

Question 7

CFA Institute standards require that convertible bonds be treated as an equity security rather than as a fixed income security in the preparation of composites.

Accepted Answer

A) True 
 B)False

Question 8

The geometric average rate of return after four years of investment returns of 7%, 12%, 15%, and 8% is 13%.

Accepted Answer

A) True 
 B)False

Question 9

If Treasury bills yielded 3%, a security with a Jensen measure of 2% underperformed the market.

Accepted Answer

A) True 
 B)False

Question 10

The Jensen performance measure utilizes the CAPM.

Accepted Answer

A) True 
 B)False

Question 11

The geometric mean is

Accepted Answer

A)  always greater than the arithmetic mean. 
B)  Always greater than or equal to the arithmetic mean. 
C)  Always less than the arithmetic mean. 
D)  Always less than or equal to the arithmetic mean. 
A)  always greater than the arithmetic mean. 
B)  Always greater than or equal to the arithmetic mean. 
C)  Always less than the arithmetic mean. 
D)  Always less than or equal to the arithmetic mean.

Question 12

A stock was purchased for $20 five years ago and was just sold for $28.05, net. Assuming no dividends were paid what annual rate of return (geometric average) did the investor earn?

Accepted Answer

A)  40.25% 
B)  10.06% 
C)  7.00% 
D)  1.40% 
A)  40.25% 
B)  10.06% 
C)  7.00% 
D)  1.40%

Sharp performance measures of a stock will be close to the Capital Market Line over time.

Over the past 4 years an investment returned 8%, 25%, 10%, and 15%. The compound annual return was

Over the past 4 years an investment returned 8%, -25%, 10%, and -15%. The compound annual return was

The denominator of the Treynor performance measure is

CFA Institute bond returns calculations considers accrual accounting which means

The risk-adjusted performance of a single security should be measured using

CFA Institute standards require that convertible bonds be treated as an equity security rather than as a fixed income security in the preparation of composites.

The geometric average rate of return after four years of investment returns of 7%, 12%, 15%, and 8% is 13%.

If Treasury bills yielded 3%, a security with a Jensen measure of 2% underperformed the market.

The Jensen performance measure utilizes the CAPM.

The geometric mean is

A stock was purchased for $20 five years ago and was just sold for $28.05, net. Assuming no dividends were paid what annual rate of return (geometric average) did the investor earn?

Understanding Risk and Return

The Marketplace

Bond Fundamentals

Common Stock

Market Mechanics

Fundamental Stock Analysis

Valuation Tools

Technical Analysis

Market Efficiency

Behavioral Finance

Gathering Investment Information

Market Indexes

Convertible Securities

Investing Internationally

Why Diversify

Derivative Assets

Managing the Equity Portfolio

Managing the Fixed Income Portfolio

Mortgage-Backed Securities

Investment Companies

Filters

Exam 22: Performance Measurement and Presentation

Sharp performance measures of a stock will be close to the Capital Market Line over time.

Over the past 4 years an investment returned 8%, 25%, 10%, and 15%. The compound annual return was

Over the past 4 years an investment returned 8%, -25%, 10%, and -15%. The compound annual return was

The denominator of the Treynor performance measure is

CFA Institute bond returns calculations considers accrual accounting which means

The risk-adjusted performance of a single security should be measured using

CFA Institute standards require that convertible bonds be treated as an equity security rather than as a fixed income security in the preparation of composites.

The geometric average rate of return after four years of investment returns of 7%, 12%, 15%, and 8% is 13%.

If Treasury bills yielded 3%, a security with a Jensen measure of 2% underperformed the market.

The Jensen performance measure utilizes the CAPM.

The geometric mean is

A stock was purchased for $20 five years ago and was just sold for $28.05, net. Assuming no dividends were paid what annual rate of return (geometric average) did the investor earn?

Understanding Risk and Return

The Marketplace

Bond Fundamentals

Common Stock

Market Mechanics

Fundamental Stock Analysis

Valuation Tools

Technical Analysis

Market Efficiency

Behavioral Finance

Gathering Investment Information

Market Indexes

Convertible Securities

Investing Internationally

Why Diversify

Derivative Assets

Managing the Equity Portfolio

Managing the Fixed Income Portfolio

Mortgage-Backed Securities

Investment Companies

Filters