Exhibit 18-9
THE FOLLOWING INFORMATION IS FOR THE NEXT PROBLEM(S)

question 19

Multiple Choice

Exhibit 18-9
THE FOLLOWING INFORMATION IS FOR THE NEXT PROBLEM(S)
Consider the following information for four portfolios, the market and the risk free rate (RFR) $\begin{array}{|l|c|c|c|}\hline \text { ortfolio } & \text { Return } & \text { Beta } & \text { SD } \\\hline \text { A1 } & 0.15 & 1.25 & 0.182 \\\hline \text { A2 } & 0.1 & 0.9 & 0.223 \\\hline \text { A3 } & 0.12 & 1.1 & 0.138 \\\hline \text { A4 } & 0.08 & 0.8 & 0.125 \\\hline \text { Market } & 0.11 & 1 & 0.2 \\\hline \text { RFR } & 0.03 & 0 & 0 \\\hline\end{array}$
-Refer to Exhibit 18-9. Calculate the Sharpe Measure for each portfolio.

• A) A1 = 0.40, A2 = 0.31, A3 = 0.65, A4 = 0.66
• B) A1 = 0.31, A2 = 0.66, A3 = 0.65, A4 = 0.40
• C) A1 = 0.66, A2 = 0.65, A3 = 0.31, A4 = 0.40
• D) A1 = 0.66, A2 = 0.31, A3 = 0.65, A4 = 0.40
• E) None of the above.

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Definitions:

Marginal Tax Rate

The rate of tax applied to the next dollar of income, indicating how much tax an individual will pay on an additional dollar of earnings.

Income Tax Schedule

A set of brackets that determine the tax rate applied to an individual's or corporation's income.

Average Tax Rate

The percentage of total income that is paid in taxes, calculated by dividing the total amount of taxes paid by the total income.

Excise Taxes

Taxes applied to specific goods, services, or transactions, often included in the price of products like tobacco, alcohol, and gasoline, aimed at reducing their consumption or raising revenue.