#1
Which of the following is a commonly used measure to evaluate mutual fund performance?
Net Asset Value (NAV)
ExplanationMeasures the value of a fund's assets minus its liabilities.
#2
Which of the following is not a category of mutual fund performance evaluation metrics?
Qualitative measures
ExplanationThese include non-quantifiable factors like fund manager experience and strategy.
#3
What is the primary purpose of benchmarking in mutual fund performance evaluation?
To compare the fund's performance against industry standards.
ExplanationProvides a reference point for assessing a fund's performance relative to similar investments.
#4
What does the Sharpe Ratio measure in mutual fund performance evaluation?
Risk-adjusted return
ExplanationQuantifies the excess return per unit of risk.
#5
Which of the following performance measures considers the risk-free rate of return?
Treynor Ratio
ExplanationEvaluates risk-adjusted return considering systematic risk relative to the risk-free rate.
#6
What is the purpose of the Treynor Ratio in mutual fund performance evaluation?
To measure risk-adjusted return per unit of total risk
ExplanationEvaluates the return earned per unit of systematic risk.
#7
Which of the following performance metrics is used to evaluate the consistency of a mutual fund's returns?
Tracking error
ExplanationQuantifies the variability of a fund's return compared to its benchmark.
#8
Which of the following is a drawback of using only historical performance data to evaluate mutual funds?
It may not reflect current market conditions.
ExplanationPast performance does not guarantee future results, especially in changing market conditions.
#9
Which of the following is NOT a factor typically considered in evaluating mutual fund performance?
Historical dividends
ExplanationWhile dividends may contribute to performance, they're not typically a primary factor.
#10
What does the Sortino Ratio evaluate in mutual fund performance?
Risk-adjusted return
ExplanationFocuses on downside risk in relation to the fund's return.
#11
What is Jensen's Alpha used for in mutual fund performance evaluation?
To assess fund manager's performance
ExplanationMeasures the excess return of a fund relative to its expected return based on the CAPM model.
#12
What is the significance of the Information Ratio in mutual fund performance evaluation?
It measures a fund's ability to generate excess returns relative to a benchmark
ExplanationEvaluates a fund manager's ability to outperform a benchmark based on active management.
#13
What does the Fama-French Three Factor Model primarily aim to evaluate?
The performance of value and size factors in fund returns
ExplanationExamines the impact of factors like size and value on a fund's returns.
#14
What does the Calmar Ratio measure in mutual fund performance evaluation?
Risk-adjusted return relative to maximum drawdown
ExplanationAssesses the relationship between a fund's return and its maximum drawdown.
#15
What does the Up Capture Ratio measure in mutual fund performance evaluation?
Fund's performance in up markets compared to a benchmark
ExplanationEvaluates how well a fund performs during upward market trends.