A Portfolio Has a Variance of

question 7

Multiple Choice

A portfolio has a variance of .0165, a beta of 1.05, and an expected return of 12.65%. What is the Sharpe ratio if the expected risk-free rate is 3.4%?

• A).662
• B).706
• C).720
• D).823
• E).869

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Definitions:

Capital Structure

The mixture of debt and equity financing that a company uses to fund its operations and growth.

Residual Dividend

A policy under which a company pays dividends to its shareholders only after all its capital needs are met for a particular period.

Compromise Dividend

A dividend payment agreed upon by a company and its shareholders to be distributed, usually under circumstances where the payment amount may not meet all parties’ expectations but is deemed acceptable.