The Table Below Presents Performance Data for the Socially Responsible

question 35

Multiple Choice

The table below presents performance data for the Socially Responsible mutual fund over the last five years. The table also includes information on the returns of the market index and T-Bills over the same period. What is the Treynor Index for Socially Responsible? $$\begin{array} { | c | c | c | c | } \hline & \begin{array} { c } \text { Average } \\\text { Retum }\end{array} & \begin{array} { c } \text { Standard } \\\text { Deviation }\end{array} & \text { Beta } \\\hline \begin{array} { c } \text { Socially } \\\text { Responsible }\end{array} & 13 \% & 37.5 \% & 3 \\\hline \text { Market } & 6 \% & 15 \% & 1 \\\hline \text { T-Bills } & 1.5 \% & \text { N/A } & \text { N/A } \\\hline\end{array}$$

• A)2.3%
• B)3.8%
• C)7.0%
• D)9.5%
• E)11.5%

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Definitions:

Accounting Rate of Return

A measure of the return expected on an investment, calculated by dividing the average annual profit by the initial investment cost.

After-Tax Net Income

The amount of profit a company remains with after all tax expenses have been deducted from its total income.

Accounting Rate of Return

A financial metric used to assess the profitability of an investment, calculated as the average annual return over the investment's life divided by the initial investment cost.

Straight-Line Depreciation

An arrangement for apportioning the financial burden of a physical investment throughout its active life in equal yearly disbursements.