FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I can't seem to solve this homework problem, could you please help? The Optima Mutual Fund has an expected return of 21 .9% and a

image text in transcribed

I can't seem to solve this homework problem, could you please help?

image text in transcribed
The Optima Mutual Fund has an expected return of 21 .9% and a volatility of 18.9%. Optima claims that no other portfolio offers a higher Sharpe ratio. Suppose this claim is true, and the risk-free interest rate is 4.4%. a. What is Optima's Sharpe ratio? b. If eBay's stock has a volatility of 42.6% and an expected return of 9.2%, what must be its correlation with the Optima Fund? c. If the SubOptima Fund has a correlation of 82% with the Optima Fund, what is the Sharpe ratio of the SubOptima Fund

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Real Estate Finance

Real Estate Finance

Authors: John P. Wiedemer, ‎ Keith J. Baker

9th edition

324181426, 324181425, 978-0324181425

More Books

Students also viewed these Finance questions

Question

★★★★★
Using the income and expense account information for Tri-Mark Products Inc. listed below, construct an income statement for the year ended 31st December, 2011. Shares outstanding: 16,740,000 Tax...

Answered: 1 week ago

Question

★★★★★
2. Visit each of the stores, and write a detailed description of the store atmosphere-colors, materials used, types of displays, lighting fixtures, product displays, store personnel, and so on.

Answered: 1 week ago

Question

★★★★★
Consider a renewal process having interarrival distribution F such that F(x) = 1 2 ex + 1 2 ex/2, x > 0 That is, interarrivals are equally likely to be exponential with mean 1 or exponential with...

Answered: 1 week ago

Question

★★★★★
1. In several countries of Africa, a common size for a Coke can is 340 milliliters (mL). Because of the variability of bottling machinery, it is likely that every 340-mL bottle of Coca-Cola does not...

Answered: 1 week ago

Question

★★★★★
Solve using augmented matrix methods 4x1-x2-11 +2%25 Select the correct choice below and, if necessary, fill in the answer box to complete your choice O A The unique slutoniandy O B. OC. There is no...

Answered: 1 week ago

Question

★★★★★
Which of the following statements is incorrect with regard to process costing? A. In sequential processing, manufacturing occurs in order of production departments. B. Manufacturers who operate in a...

Answered: 1 week ago

Question

★★★★★
Consider the nonlinear regression model \(y=\exp \left(\mathbf{x}^{\prime} \boldsymbol{\beta} ight) /\left[1+\exp \left(\mathbf{x}^{\prime} \boldsymbol{\beta} ight) ight]+u\), where the error term is...

Answered: 1 week ago

Question

★★★★★
The term blue chip applies to stocks issued by a company in excellent financial standing with a record of producing earnings and paying dividends. Stocks in companies such as GE and Chrysler were...

Answered: 1 week ago

Question

★★★★★
An ETF is a. a contract that gives a buyer the right to buy or sell a security at a specified price on or before a certain date. b. an agreement between a buyer and seller to buy an asset at a later...

Answered: 1 week ago

Question

★★★★★
Treasury notes are bonds that mature in 2, 3, 5, 7, and 10 years. True or False

Answered: 1 week ago

Question

★★★★★
If you own a $5,000 bond that has a coupon of 4 percent and pays interest semiannually, how much interest would you receive? a. $200 every six months b. $200 once a year c. $200 every two years d....

Answered: 1 week ago

Question

★★★★★
Evaluation of financial information through analysis of plausible relationships among both financial and nonfinancial data is: * Test of controls Test of details Substantive analytical procedures...

Answered: 1 week ago

Question

★★★★★
Define tangible and intangible products, and explain why there are different product cost definitions.

Answered: 1 week ago

Question

★★★★★
Prepare income statements for manufacturing and service organizations.

Answered: 1 week ago

Question

★★★★★
Explain the differences between traditional and contemporary cost management systems.

Answered: 1 week ago

Previous Question Next Question