Exhibit 7-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $$\begin{array} { c c c c }
\text { Period } & \begin{array} { c }
\text { Return } \
\text { of Radtran } \
\text { (Percent) }
\end{array} & \begin{array} { c }
\text { Ppecific Index } \
\text { (Percent) }
\end{array} & \begin{array} { c }
\text { True } \
\text { General Index } \
\text { (Percent) }
\end{array} \
\hline 1 & 10 & 12 & 15 \
2 & 12 & 10 & 13 \
3 & - 10 & - 8 & - 8 \
4 & - 4 & - 10 & 0
\end{array}$$
-Refer to Exhibit 7-3. What is the average proxy return?
A) 1%
B) 2%
C) 3%
D) 4%
E) 5%

Question

Exhibit 7-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $$\begin{array} { c c c c } 
\text { Period } & \begin{array} { c } 
\text { Return } \
\text { of Radtran } \
\text { (Percent) }
\end{array} & \begin{array} { c } 
\text { Ppecific Index } \
\text { (Percent) }
\end{array} & \begin{array} { c } 
\text { True } \
\text { General Index } \
\text { (Percent) }
\end{array} \
\hline 1 & 10 & 12 & 15 \
2 & 12 & 10 & 13 \
3 & - 10 & - 8 & - 8 \
4 & - 4 & - 10 & 0
\end{array}$$
-Refer to Exhibit 7-3. What is the average proxy return?
A) 1%
B) 2%
C) 3%
D) 4%
E) 5%

Quizplus · Accepted Answer

The average proxy return is calculated by averaging the returns of the Ppecific Index and the True General Index. For the Ppecific Index, the returns are 12, 10, -8, and -10, which average to 1%. For the True General Index, the returns are 15, 13, -8, and 0, which average to 5%. The average of these two averages (1% and 5%) is 3%. However, the question asks for the average proxy return, which typically refers to the return of a single index used as a proxy. In this context, it seems there might be a misunderstanding in the interpretation. Given the data, if we consider the "Ppecific Index" as the proxy, its average return is calculated as (12 + 10 - 8 - 10)/4 = 1%.

Exhibit 7-3 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Exhibit 7-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)