You Want to Evaluate Three Mutual Funds Using the Sharpe

question 50

Multiple Choice

You want to evaluate three mutual funds using the Sharpe measure for performance evaluation. The risk-free return during the sample period is 4%. The average returns, standard deviations, and betas for the three funds are given below, as are the data for the S&P 500 Index. $\begin{array}{cc} &\text {Average ReturnResidual } &\text { Standard Deviation }&\text { Beta }\\ \text { Fund A } &18\%&38\%&1.6\\ \text {Fund B } &15\%&27\%&1.3\\ \text { Fund C} &11\%&24\%&1.0\\\text {S\&P 500}&10\%&22\%&1.0\end{array}$


The fund with the highest Sharpe measure is

• A) Fund A.
• B) Fund B.
• C) Fund C.
• D) Funds A and B (tied for highest).
• E) Funds A and C (tied for highest).

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Definitions:

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A French sociologist, anthropologist, and philosopher known for his theory of habitus and concepts of cultural capital, social capital, and symbolic violence.

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A 19th-century philosopher, economist, and political theorist best known for his theories about capitalism and communism.