Questions from General Investment

Q: Evaluate the market timing and security selection abilities of four managers whose

Evaluate the market timing and security selection abilities of four managers whose performances are plotted in the accompanying diagrams.

Q: Consider the following information regarding the performance of a money manager in

Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager’s portfolio in...

Q: A global equity manager is assigned to select stocks from a universe

A global equity manager is assigned to select stocks from a universe of large stocks throughout the world. The manager will be evaluated by comparing her returns to the return on the MSCI World Market...

Q: Conventional wisdom says that one should measure a manager’s investment performance over

Conventional wisdom says that one should measure a manager’s investment performance over an entire market cycle. What arguments support this convention? What arguments contradict it?

Q: Peninsular Research is initiating coverage of a mature manufacturing industry. John

Peninsular Research is initiating coverage of a mature manufacturing industry. John Jones, CFA, head of the research department, gathered the following fundamental industry and market data to help in...

Q: Does the use of universes of managers with similar investment styles to

Does the use of universes of managers with similar investment styles to evaluate relative investment performance overcome the statistical problems associated with instability of beta or total variabil...

Q: During a particular year, the T-bill rate was 6

During a particular year, the T-bill rate was 6%, the market return was 14%, and a portfolio manager with beta of 0.5 realized a return of 10%. What was the manager’s alpha?

Q: Bill Smith is evaluating the performance of four large-cap equity

Bill Smith is evaluating the performance of four large-cap equity portfolios: Funds A, B, C, and D. As part of his analysis, Smith computed the Sharpe ratio and Treynor’s measure for...

Q: Primo Management Co. is looking at how best to evaluate the

Primo Management Co. is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As s...

Q: Primo Management Co. is looking at how best to evaluate the

Primo Management Co. is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As s...