The Average Returns, Standard Deviations and Betas for Three Funds

question 71

Multiple Choice

The average returns, standard deviations and betas for three funds are given below along with data for the S&P 500 index. The risk free return during the sample period is 6%.
-You wish to evaluate the three mutual funds using the Treynor measure for performance evaluation.The fund with the highest Treynor measure of performance is __________.

• A) Fund A
• B) Fund B
• C) Fund C
• D) indeterminable

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Definitions:

Conceptual Framework

An underlying structure in accounting that guides the development of standards and the preparation of financial statements.

Equity

The value of an owner's interest in a property, minus the liabilities tied to the property.

Independent

Free from external control or influence; not depending on another's authority.

Historical Cost

An accounting principle requiring assets to be recorded at their original cost at the time of purchase, without adjustments for inflation or market value changes.