Niki Malone's portfolio earned a return of

11.5%

during the year just ended. The portfolio's standard deviation of return was

14.5%.

The risk-free rate is currently

5.7%.

During the year, the return on the market portfolio was

9.2%

and its standard deviation was

9.7%.

a.Calculate Sharpe's measure for Niki Malone's portfolio for the year just ended.

b.Compare the performance of Niki's portfolio found in part a to that of Hector Smith's portfolio, which has a Sharpe's measure of

0.447.

Which portfolio performed better? Why?

c.Calculate Sharpe's measure for the market portfolio for the year just ended.

d.Use your findings in parts a and c to discuss the performance of Niki's portfolio relative to the market during the year just ended.