Suppose You Invest Equally in Portfolio a and Portfolio C

question 99

Multiple Choice

Suppose you invest equally in Portfolio A and Portfolio C. What is the Sharpe ratio for the combined portfolio?

• A) 0.431
• B) 0.363
• C) 0.420
• D) 0.389

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Definitions:

Free Cash Flow

The amount of cash generated by a business after accounting for operational expenses and capital expenditures, available for distribution among stakeholders.

Operating Activities

Activities that are directly related to the operation of the business, such as selling, managing, and producing goods and services.

Capital Expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Direct Method

A costing approach where only direct costs are charged to a cost object, typically excluding overhead or indirect costs.