Ch 13.

Question 1

Raw return

Answer 1

The total percentage return on an investment with no adjustment for risk or comparison to any benchmark

Question 2

sharp ratio

Answer 2

Measures investment performance. As the ratio of portfolio risk premium over portfolio return standard deviation

Question 3

Treynor ratio

Answer 3

Measures investment performance as the tail of oft folio risk premium over portfolio beta

Question 4

Jensens alpha

Answer 4

Measures investment performance as the raw portfolio return less the return predicted by the capital asset pricing model

Question 5

Information ratio

Answer 5

Alpha divided by tracking error.

Question 6

Tracking error

Answer 6

A measure of how volatile a portfolio is relative to its benchmark

Question 7

Investment risk management

Answer 7

Concerns a money managers control over investment risks, usually with respect to potential short run losses

Question 8

Value at risk

Answer 8

Assesses risk by stating the probability of a loss a portfolio might experience writhing a fixed time horizon with a specified probability

Question 9

Normal distribution

Answer 9

A statistical model for assessing probabilities related to many phenomena, including security returns

Question 10

Performance evaluation

Answer 10

The assessment of how well a money manager achieves a balance between high returns and acceptable risks