The Mean and Standard Deviation (SD)of Monthly Returns,over a Given

question 61

Multiple Choice

The mean and standard deviation (SD) of monthly returns,over a given period of time,for the stock markets of two countries,X and Y are: $$\begin{array} { | c | c | c | } \hline \text { Countr) } & \text { Mean(\%) } & \text { SD(\%) } \\\hline \mathrm { X } & 1.57 & 4.87 \\\hline \mathrm { Y } & 1.92 & 7.64 \\\hline\end{array}$$ Assuming that the monthly risk-free interest rate is 0.25 percent,the Sharpe performance measures,SHP(X) and SHP(Y) ,and the performance ranks,respectively,for X and Y are:

• A)SHP(X)= 0.271,rank = 1,and SHP(Y)= 0.219,rank = 2.
• B)SHP(X)= 0.271,rank = 2,and SHP(Y)= 0.219,rank = 1.
• C)SHP(X)= 18.84,rank = 1,and SHP(Y)= 23.04,rank = 2.
• D)SHP(X)= 23.04,rank = 2,and SHP(Y)= 18.84,rank = 1.

---

Definitions:

Natural Rate

The level of economic output at which the rate of inflation is stable, often related to the concept of the natural rate of unemployment where the labor market is in equilibrium.

Consumer Price Index

A metric that analyzes the weighted average cost of a selection of consumer goods and services, such as medical care, transportation, and food, to measure inflation.

Short-Run Aggregate Supply

Represents the total supply of goods and services that firms in an economy plan on selling during a short-term period, given the level of prices.

Long-Run Aggregate Supply

Represents the total output an economy can produce when both capital and labor are fully employed, assuming constant technology and resources.