Use the Following Information to Answer the Question(s)below

question 128

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that all stocks can be grouped into two mutually exclusive portfolios (with each stock appearing in only one portfolio) : growth stocks and value stocks.Assume that these two portfolios are equal in size (market value) ,the correlation of their returns is equal to 0.6,and the portfolios have the following characteristics: The risk free rate is 3.5%.
-The Sharpe ratio for the market (which is a 50-50 combination of the value and growth portfolios) portfolio is closest to:

• A).53
• B).58
• C).61
• D).79

---

Definitions:

Yield Management

A pricing strategy that involves managing inventory or capacity to maximize revenue through variable pricing based on demand and supply conditions.

Operations Management

The administration of business practices designed to ensure maximum efficiency within an organization, focusing on the management of processes to produce and distribute products and services.

Demand Curve

A graph showing the relationship between the price of a product and the quantity demanded by consumers.

Chase Aggregate Plan

A planning approach that adjusts production rates and workforce levels to match demand fluctuations, minimizing inventory and staffing costs.