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Grotesque Corporation is a public company, and Corporation Fund is a relatively well-diversified mutual fund. The following two graphs show regressions for the market's historic

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Grotesque Corporation is a public company, and Corporation Fund is a relatively well-diversified mutual fund. The following two graphs show regressions for the market's historic realized returns versus historic realized returns on Grotesque Corporation and Corporation Fund. Graph A Graph B HISTORIC REALIZED RETURNS HISTORIC REALIZED RETURNS 20% 20% 10% -20% O a od 00 60 -10% o 000 0 10% 20% 10% HISTORIC REALIZED RETURNS ON THE MARKET (Percent) HISTORIC REALIZED RETURNS ON THE MARKET (Percent) -10% -20% -20% Which of the graphs most accurately represents the relationship between the market historic realized returns and realized returns on Corporation Fund? Graph B Graph A 00 0 O 0 O 0 O 0 -20% O 0 10% % 09 -10% O O 0.5 -10% Which of the following measures the average return earned on a security or portfolio in excess of that which could have been earned on a risk-free asset divided by its beta? Treynor's reward-to-volatility ratio Jensen's alpha Sharpe's reward-to-variability ratio The following table reports some of the regression results for Grotesque Corporation and Corporation Fund. Regression t- Statistic Probability of t- Statistic Lower 95% Confidence Interval Upper 95% Confidence Interval Institution Coefficient Grotesque Corporation Intercept 0.00 -0.09 0.93 -0.02 0.02 Slope (beta) 1.66 9.71 0.00 2.01 1.32 Corporation Fund Intercept 0.01 0.00 0.70 0.49 0.00 1.20 Slope (beta) 0.00 21.10 1.09 1.32 Which of the following statements are consistent with the data for Grotesque Corporation? Check all that apply. The probability that the true beta is equal to zero is virtually nonexistent. The estimate for the beta for Grotesque Corporation is precise. There is a 95% probability that the true beta is between 1.32 and 2.01. There is a 95% probability that the true beta is between -0.02 and 0.02

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