The USTreasury Bill Is Yielding 3

question 11

Multiple Choice

The U.S.Treasury bill is yielding 3.0 percent and the market has an expected return of 11.6 percent.What is the Treynor ratio of a correctly-valued portfolio that has a beta of 1.02,and a standard deviation of 12.2 percent?

• A).074
• B).086
• C).102
• D).619
• E).628

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Definitions:

Mutually Exclusive

Situations, choices, or events that cannot occur or be chosen at the same time; selecting one option excludes the possibility of the other.

WACC

The Weighted Average Cost of Capital (WACC) represents the expected average return rate a company owes its security holders for financing its assets.

NPV

Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.

IRR

Utilized in assessing investment opportunities within capital budgeting, the Internal Rate of Return signifies the estimated profit rate of future investments.