A Portfolio Has a Beta of 1

question 92

Multiple Choice

A portfolio has a beta of 1.35, a standard deviation of 13.3%, and an average return of 12.01%. The market rate is 12.7% and the risk-free rate is 2.1%. What is the Sharpe ratio?

• A).716
• B).745
• C).754
• D).847
• E).863

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Definitions:

Accounts Receivable

The amount customers are yet to pay a company for goods or services that have already been delivered or performed.

Income Statement

A financial statement that reports a company's financial performance, including revenues, expenses, and profit, over a specific period.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations section is used rather than being derived from the income statement.

Prepaid Expenses

Costs paid for in advance of their use or consumption, recorded as assets on a balance sheet and gradually expensed over the period of use or benefit.