A Portfolio Has a Beta of 1

question 82

Multiple Choice

A portfolio has a beta of 1.26,a standard deviation of 15.9 percent,and an average return of 15.07 percent.The market rate is 12.7 percent and the risk-free rate is 3.6 percent.What is the Sharpe ratio?

• A).61
• B).68
• C).72
• D).84
• E).88

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus, representing the total benefit to society from the production and consumption of goods and services.

Transplant Organs

Organs removed from one body and placed in another's body for the purpose of replacing a missing or defective organ.

Market

An economic system where goods and services are freely exchanged between buyers and sellers under competitive conditions.

Efficiency

The state or quality of being able to achieve maximum productivity with minimum waste or expense.