The Following Table Summarizes Selected Statistics for Two Portfolios for a 10-Year

question 29

Multiple Choice

The following table summarizes selected statistics for two portfolios for a 10-year period. Assume that the risk-free rate is 4% over this period. As measured by the Sharpe ratio, the fund with the superior risk-adjusted performance during this period is ________.

• A) Fund A because it has a lower positive Sharpe ratio than Fund B
• B) Fund B because it has a lower positive Sharpe ratio than Fund A
• C) Fund A because it has a higher positive Sharpe ratio than Fund B
• D) Fund B because it has a higher positive Sharpe ratio than Fund A

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Definitions:

House of Burgesses

The first legislative assembly of elected representatives in North America, established in the Colony of Virginia in 1619.

Representative Government

A form of government in which citizens elect officials to create laws and policies on their behalf.

Joint Stock Companies

Businesses owned by shareholders where the stock can be bought and sold on the open market, spreading the risk and profit among many.

English Investors

Individuals or entities from England that allocate capital with the expectation of earning a financial return, often involving investments in foreign or domestic markets.