The Following Data Are Available Relating to the Performance of Sooner

question 51

Multiple Choice

The following data are available relating to the performance of Sooner Stock Fund and the market portfolio:

The risk-free return during the sample period was 3%.
What is the Treynor measure of performance evaluation for Sooner Stock Fund?

• A) 0.0133
• B) 0.04
• C) 0.0867
• D) 0.0944
• E) 0.3714

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Definitions:

Hedge

An investment made to reduce the risk of adverse price movements in an asset.

Speculative Forward Contract

A financial derivative used to speculate on the future price of an asset, involving an agreement to buy or sell the asset at a future date for a price determined today.

Fair Value Hedge

A risk management technique that uses financial instruments to mitigate the risk associated with changes in the fair value of an asset or liability.

Firm Commitment

An agreement between a buyer and an underwriter in which the underwriter guarantees the sale of a certain amount of securities.