The Average Returns, Standard Deviations and Betas for Three Funds

question 42

Multiple Choice

The average returns, standard deviations and betas for three funds are given below along with data for the S&P 500 index. The risk-free return during the sample period is 6%. You wish to evaluate the three mutual funds using the Sharpe measure for performance evaluation. The fund with the highest Sharpe measure of performance is ________.

• A)Fund A
• B)Fund B
• C)Fund C
• D)indeterminable

---

Definitions:

Real GDP

The market value of all final goods and services produced within a country in a given period, adjusted for inflation.

Recessions

Phases of momentary economic slump that lead to a reduction in trading and industrial activities, frequently identified by declining GDP in two successive quarters.

Aggregate Demand

The total demand for all goods and services in an economy at a given general price level and in a given time period.

Aggregate Supply

The aggregate output of goods and services that companies in a national economy aim to market within a given timeframe.