The Following Data Are Available Relating to the Performance of Monarch

question 14

Multiple Choice

The following data are available relating to the performance of Monarch Stock Fund and the market portfolio: $$\begin{array} { l c c } & & \text { Market } \\& \text { Monarch } & \text { Portfolio } \\\text { Average return } & 16 \% & 12 \% \\\text { Standard deviations of returns } & 26 \% & 22 \% \\\text { Beta } & 1.15 & 1.00 \\\text { Residual standard deviation } & 1 \% & 0 \% \\\end{array}$$ The risk-free return during the sample period was 4%. Calculate Treynor's measure of performance for Monarch Stock Fund.

• A) 10.40%
• B) 8.80%
• C) 44.00%
• D) 50.00%

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Definitions:

Trial Balance

A bookkeeping report that lists the balances of all ledgers in two columns, debits and credits, ensuring that total debits equal total credits.

Debit

An accounting entry that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Credit

An accounting entry on the right side of an account ledger, recording increases in liabilities, equity, and revenue, or decreases in assets and expenses.

Recording Process

The act of documenting financial transactions systematically in the books of accounts of a business.