Zilo Stock Has an Average Return Minus the Average Risk-Free

question 44

Multiple Choice

Zilo stock has an average return minus the average risk-free rate of 5 percent, a beta of 1, and a standard deviation of returns of 20 percent. The Sharpe index of Zilo stock is

• A)0.05.
• B)0.35.
• C)0.25.
• D)0.45.
• E)None of these are correct.

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Definitions:

Small Lot Size

A production strategy where quantities of manufactured items are kept low, allowing for greater flexibility in product variation and reducing inventory costs.

Lean Operations

A management philosophy aimed at minimizing waste within manufacturing systems while simultaneously maximizing productivity.

Toyota Production System

A highly efficient and flexible production system developed by Toyota that focuses on eliminating waste and increasing quality.