USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 30

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
An analyst is considering investing in funds A, B, C, and D. The market portfolio, M, is expected to be 11 percent next period, and the risk-free rate of return is 3 percent. The market portfolio had a standard deviation over the past ten years of 0.20. The analyst gathered the following information on the four funds.

-Refer to Exhibit 18.8. Rank the four funds and market portfolio in order from highest to lowest based on their Sharpe measures.

• A) A, B, C, D, M
• B) B, C, M, D, A
• C) C, A, M, D, B
• D) D, A, B, M, C
• E) D, B, A, C, M

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Definitions:

Direct Materials

Raw materials that can be directly traced to the production of a specific product, a component of the total manufacturing cost.

Variances

Differences between planned or expected financial outcomes and the actual results.

Standard Direct Materials

The budgeted cost for direct materials which are the raw materials that can be directly attributed to the production of goods, used for budgeting and performance evaluation.

Actual Materials Price

The real cost incurred to acquire materials used in the production process, as opposed to the budgeted or standard cost.