A Portfolio Has an Average Return of 14 Percent, a Standard

question 47

Multiple Choice

A portfolio has an average return of 14 percent, a standard deviation of 27 percent, and a beta of 1.15. The risk-free rate is 4.5 percent, and the expected return of the market is 12 percent. What is the Treynor ratio for the portfolio?

• A) 0.0741
• B) 0.0943
• C) 0.0782
• D) 0.0918
• E) 0.0826

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Definitions:

Adjusted Gross Income (AGI)

A person's entire income before adjustments, reduced by certain allowable deductions, to calculate the income subject to tax.

Gross Income

The total income received before any deductions or taxes are taken out.

Permitted Deductions

Expenses that can legally be subtracted from one's gross income to reduce the amount of income subject to tax.

Qualifying Child

A child who meets specific IRS criteria, allowing taxpayers to claim certain tax benefits.