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Quantitative Methods MCQ - Quantitative Methods Section 2

11 The table below summarizes the performance data for three portfolios:

Portfolio	Arithmetic mean return(%)	Variance of (%)
Portfolio A	16.4%	4.9%
Portfolio B	12.6%	3.5%
Portfolio C	14.8%	4.2%

Given that the mean return on the risk-free asset is 10.5 percent, which portfolio is most likely to have the highest Sharpe ratio?

12 A distribution more peaked than the normal distribution is best described as being:

Leptokurtic describes a distribution that is more peaked than the normal distribution. Platykurtic is a distribution less peaked than a normal distribution. Mesokurtic is a distribution as peaked as the normal distribution.

13 In a continuous distribution where the graph shows the right tail of the curve to be longer than the left tail is best described as having:

A positively skewed distribution appears as if the right tail has been pulled away from the mean.

14 Which of the following return distribution is most likely characterized by frequent small losses and a few large gains?

A positively skewed distribution has frequent small losses and a few large gains. A negatively skewed distribution has frequent small gains and a few large losses. A normal distribution is symmetrical.

15 Which of the following relationships best characterize a negatively skewed distribution?

For a negatively skewed distribution, the mean is less than the median, which is less than the mode.

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Expected Value

Expected value is the probability-weighted average of the possible outcomes of a random variable. In investment analysis, it represents the long-run average outcome implied by the probability distribution.

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A portfolio manager had invested a total amount of $300,000 in stocks and fixed income instruments at the start of the year. Equity investments represented 60% of the…

A. 16.7%.
B. 22.2%.
C. 27.0%.

Correct answer: C

Explanation:

The total portfolio return is calculated as the weighted average return of the portfolio constituents. Portfolio return = (0.6 * 0.35) + (0.4 * 0.15) = 0.27 =…

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