Three Investment Options Are Under Consideration for Inclusion in a Mutual

question 11

Essay

Three investment options are under consideration for inclusion in a mutual fund.Given that the return on a one-year T-bill is 4.5%,use the Sharpe ratio to select the best option.

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Definitions:

Rival In Consumption

A characteristic of a good whereby its use by one person diminishes its availability for use by another person, contrasting with non-rival goods.

Gym Membership

A paid subscription that grants an individual access to a gym's facilities and equipment for a set period of time, promoting physical fitness and health.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they can be used by anyone without preventing others from using them as well.

Not Excludable

A characteristic of a good or service that does not allow producers to prevent its use by non-paying consumers, often leading to market failure.