The Following Table Shows the Annual Returns (In Percent) Chevron

question 28

Essay

The following table shows the annual returns (in percent) Chevron and Caterpillar for . (See the Excel Data File.)
A) Which fund had the higher arithmetic average return?
B) Which fund was riskier over this time period?
C) Given a risk-free rate of 1%, which fund has the higher Sharpe ratio? What does this imply?

• A) Which fund had the higher arithmetic average return?
• B) Which fund was riskier over this time period?
• C) Given a risk-free rate of 1%, which fund has the higher Sharpe ratio? What does this imply?

---

Definitions:

Life Policy

An agreement that awards a specified sum to a named beneficiary when the person covered by the policy dies.

Maximum Available

The highest amount or quantity that can be used, offered, or allocated from a particular resource or within a specific framework.

Straight-life Policy

A type of life insurance policy that provides coverage for the insured's entire lifetime, with fixed annual premiums and a guaranteed death benefit.

Loan Value

The amount that an insured may borrow on a policy from the insurance company.