Which one of the following would not be considered to be a Risk-Adjusted Performance Appraisal Measure?

a. Sharpe Model

b. Jensen Index

c. Zero-beta model

d. Treynor Model

10. What is the probability of a superior manager underperforming his or her benchmark over a three-year period?

a. 3 managers underperform: 24.6% probability

b. 5 managers underperform: 1.45% probability

c. 7 managers underperform: 19.68% probability

d. 9 managers underperform: 5.38% probability

11. Which one of the following would constitute a Type I error?

a. hiring a manager with no value added to the fund

b. not hiring a manager who brings value added to the fund

c. firing a manager who brings positive value to the fund

d. hiring a manager who brings value added to the fund

12. Why is performance evaluation important to a fund sponsor as enumerated in the text?

a. Performance evaluation allows fund sponsors to assess the manager's honesty.

b. Performance evaluation is an integral part of the feedback and assessment loop.

c. Performance evaluation provides structure that is even more important than the Investment Policy Statement.

d. Performance evaluation assists the accounting department keep closer track of buys and sells.