The information in the following table is to be used to answer questions
$\begin{array}{|l|c|c|c|c|}
\hline \text { Fund } & \text { Standard Deviation } & \text { Beta } & \begin{array}{c}
\text { Jensen's } \
\text { Alpha }
\end{array} & \mathbf{R}^{\mathbf{2}} \
\hline \text { Fund 1 } & 1.97 & 1.0 & 1.3 & 0.95 \
\hline \text { Fund 2 } & 2.97 & 0.8 & 0.6^{*} & 0.80 \
\hline \text { Fund 3 } & 3.82 & 1.2 & -3.5^{*} & 0.90 \
\hline \text { Fund 4 } & 3.50 & 1.4 & 4.2 & 0.65 \
\hline
\end{array}$
-Which fund is least well-diversified?
A) Fund 1
B) Fund 2
C) Fund 3
D) Fund 4

Question

The information in the following table is to be used to answer questions 
$\begin{array}{|l|c|c|c|c|}
\hline \text { Fund } & \text { Standard Deviation } & \text { Beta } & \begin{array}{c}
\text { Jensen's } \
\text { Alpha }
\end{array} & \mathbf{R}^{\mathbf{2}} \
\hline \text { Fund 1 } & 1.97 & 1.0 & 1.3 & 0.95 \
\hline \text { Fund 2 } & 2.97 & 0.8 & 0.6^{*} & 0.80 \
\hline \text { Fund 3 } & 3.82 & 1.2 & -3.5^{*} & 0.90 \
\hline \text { Fund 4 } & 3.50 & 1.4 & 4.2 & 0.65 \
\hline
\end{array}$
-Which fund is least well-diversified?
A) Fund 1
B) Fund 2
C) Fund 3
D) Fund 4

Quizplus · Accepted Answer

The R² value indicates the proportion of a fund's movements that can be explained by movements in the market index. A lower R² value suggests less diversification. Fund 4 has the lowest R² value of 0.65, indicating it is the least well-diversified.

The Information in the Following Table Is to Be Used