Boris Stock Has an Average Return of 15 Percent

question 34

Multiple Choice

Boris stock has an average return of 15 percent. Its beta is 1.5. Its standard deviation of returns is 25 percent. The average risk-free rate is 6 percent. The Sharpe index for Boris stock is

• A) 0.35.
• B) 0.36.
• C) 0.45.
• D) 0.28.
• E) none of the above

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Definitions:

Natural Monopoly

A market condition where a single firm can supply a product or service at a lower cost than any potential competitor, often due to economies of scale.

Marginal Cost

The outlay for making one more unit of a product or service.

Profit Per Unit

The amount of profit earned by selling one unit of a product or service.