A Firm That Evaluates Portfolios Uses the Sharpe Approach to Measuring

question 27

Essay

A firm that evaluates portfolios uses the Sharpe approach to measuring performance.How would it rank these three portfolios? $$\begin{array} { | l | r | r | r | } \hline & \text { Total } & \text { Risk } & \\\hline & \text { Portfolio } & \text { Free } & \text { Standard } \\\hline & \underline { \text { Return } } & \text { Rate } & \text { Deviation } \\\hline \text { Bemis Money Managers } & 10 \% & 6 \% & 16 \% \\\hline \text { Fiddler Investment Company } & 15 \% & 6 \% & 20 \% \\\hline \text { Memory Group } & 8 \% & 6 \% & 11 \% \\\hline\end{array}$$ Sharpe Measure $=$ $\frac{\text {Total Portfolio Return - Risk Free Rate }}{\text { Portfolio Standard Deviation}}$ What percent of funds under management should be invested in stocks,bonds,and the like?

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Definitions:

Intelligence Bases

Facilities or locations where intelligence agencies operate to collect, analyze, and process information relevant to national security.

Formosa Resolution

The Formosa Resolution was a measure passed by the U.S. Congress in 1955, authorizing the President to defend Taiwan (Formosa) against armed attack.

American Troops

Individuals serving in the United States Armed Forces, which encompasses the Army, Navy, Marine Corps, Air Force, and Coast Guard.

1955

The year 1955 is notable for several historical events, including the Montgomery Bus Boycott, which marked the beginning of the civil rights movement in the United States.