The Table Below Gives Statistics Relating to a Hypothetical 10-Year

question 130

Multiple Choice

The table below gives statistics relating to a hypothetical 10-year record of two portfolios. Assume other statistics relating to these portfolios are the same and the risk-free rate is 3.5%. Using the coefficient of variation and the Sharpe ratio, the fund that is preferred in terms of relative risk and return per unit of risk is ________.

• A) Portfolio A because it has a higher coefficient of variation and a lower Sharpe ratio
• B) Portfolio A because it has a lower coefficient of variation and a higher Sharpe ratio
• C) Portfolio B because it has a higher coefficient of variation and a lower Sharpe ratio
• D) Portfolio B because it has a lower coefficient of variation and a higher Sharper ratio

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Definitions:

No Demand

A market situation where there is no consumer desire or interest in purchasing a specific product or service.

Inconsistency

The state of being inconsistent; lack of uniformity or steadiness in actions, values, or outcomes.

Training

The process of teaching or developing in oneself or others, any skills and knowledge that relate to specific useful competencies.

Wedding Preparation Service

A business that offers planning and coordinating services for weddings, including venue selection, catering, and decorations.