Answer the following (4) multiple choice questions:

1. Relative to the Sharpe ratio, the Sortino ratio will make a portfolios performance look more favorable if the portfolio has experienced:

A. fewer extreme negative returns relative to extreme positive returns.

B. fewer extreme positive returns relative to extreme negative returns.

C. an equal number of extreme positive and extreme negative returns.

D. virtually no extreme negative or extreme positive returns.

2. Which of the following is true regarding M2? It produces a measure of portfolio performance that:

A. is adjusted for systematic risk.

B. can be compared directly to the risk-free rate.

C. can be compared directly with the market return.

D. indicates what would be possible if the portfolio was fully leveraged.

3. Which measure calculates performance relative to a benchmark portfolio?

A. Sortino ratio

B. M2

C. Information ratio

D. Sharpe ratio

4. Which of the following statements about portfolio return calculation is most accurate? Time-weighted returns are best for measuring the returns of a:

A. fund manager, whereas money-weighted returns are best for a portfolio owner.

B. portfolio owner, whereas money-weighted returns are best for a fund manager.

C. fund manager, whereas money-weighted returns are no longer used in practice.

D. portfolio owner, whereas money-weighted returns are generally used in practice.