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

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Definitions:

Services

Services are intangible actions or activities that one party provides to another, which do not result in the ownership of anything but can fulfill a need or provide satisfaction.

Par Common Stock

The nominal or face value assigned to common stock shares in the corporate charter, significant for legal and accounting purposes.

Par Preferred Stock

Preferred shares of a company that have a declared face value and potentially have priority over common stock in dividend distribution.

Shares

Shares represent an ownership stake in a company or financial asset, entitling the holder to a proportional share of profits, distributed as dividends, if announced.