A Portfolio Has a Beta of 1

question 50

Multiple Choice

A portfolio has a beta of 1.26,a standard deviation of 15.9 percent,and an average return of 15.07 percent.The market rate is 12.7 percent and the risk-free rate is 3.6 percent.What is the Sharpe ratio?

• A) 0.61
• B) 0.68
• C) 0.72
• D) 0.84
• E) 0.88

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Definitions:

Exposure

The act of making something visible or subjecting someone to an experience or influence.

Attention

The mental ability to focus on a single element of one's surroundings while disregarding other stimuli.

Weber's Law

A principle of perception that states the change in a stimulus that will be just noticeable is a constant ratio of the original stimulus.

Psychophysics

The scientific study of the relationship between physical stimuli and the sensations and perceptions they produce in the human mind.