(Treynor ratio) The risk-free rate is 1%. You observe two fund managers (X and Y) and the market portfolio.

a. Calculate the beta of each stock and the market portfolio

b. Calculate the Treynor ratio for each stock and the market portfolio.

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1 A B C D TREYNOR RATIO 1% 2 Risk-free return 3 Mutual fund Market X Y portfolio 4 Mean return 7% 15% 10% 5 Standard deviation 25% 45% 18% 6 Correlation coefficient with the market (Pim) 0.36 0.5 1 7 Beta 8 Treynor ratio