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:

Outside Supplier

An outside supplier is an external entity that provides goods or services to a company, typically not affiliated with the company’s internal supply chain.

Fixed Manufacturing Overhead

Costs related to the production process that do not change with the volume of production, such as salaries of manufacturing supervisors and rent for the factory.

Direct Labor

The wages and other costs for labor directly involved in the production of goods.

Differential Cost

This refers to the difference in total cost between two alternatives in a decision-making process.