A Portfolio Has a Beta of 1

question 3

Multiple Choice

A portfolio has a beta of 1.23 and a standard deviation of 11.6 percent.What is the Sharpe ratio if the market return is 12.4 percent and the market risk premium is 7.9 percent?

• A).07
• B).11
• C).65
• D).84
• E).90

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Definitions:

Operating Costs

Expenses associated with the day-to-day functioning of a business, excluding costs related to production.

Service Hours

A measure of the time that employees or machines are actively providing services, often used in allocating service costs or assessing productivity.

Net Operating Income

The profit generated from a company's core business operations, excluding costs and expenses from financing and investing activities.

Unit Sales

The total quantity of product units that a company sells to its customers.