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:

Descriptive Research Methods

Research techniques that describe the characteristics of a population or phenomenon being studied, without attempting to determine cause and effect relationships.

Surveys

Research methods involving the collection of data from a predefined group of respondents to gather information and insights on various topics of interest.

Interviews

A method of gathering information by asking questions face-to-face, over the phone, or via digital platforms.

Stimulate

To encourage or provoke an activity or increase in functionality either physically or mentally.