You Want to Evaluate Three Mutual Funds Using the Sharpe

question 19

Multiple Choice

You want to evaluate three mutual funds using the Sharpe measure for performance evaluation. The risk-free return during the sample period is 5%. The average returns, standard deviations, and betas for the three funds are given below, as are the data for the S&P 500 Index.

The investment with the highest Sharpe measure is

• A) Fund A.
• B) Fund B.
• C) Fund C.
• D) the index.
• E) Funds A and C (tied for highest).

---

Definitions:

Teratogen

Any agent that can cause developmental malformations (birth defects) in an embryo or fetus.

Birth Defect

An abnormality in physical or mental development that is present at birth or develops shortly after birth.

Peer Group

A social group whose members have interests, social positions, and age in common, influencing the attitudes and behaviors of its members.

Neglected

Refers to something or someone that has been ignored or not given enough attention and care.