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:

Cycle Inventory

The portion of inventory that a company cycles through to fulfill its regular sales orders.

Indirect Materials

Materials used in the production process that do not become part of the final product, such as lubricants and cleaning supplies.

Transaction Cost

The expenses incurred when buying or selling goods or services, including fees, communication charges, and other financial costs.

Management Cost

Expenses associated with the administration and operation of a business, including salaries of managers and costs of strategic activities.