Question
STOCK BOOM (60% CHANCE) BUST (40% CHANCE) STOCK A 20% RETURN 5% RETURN STOCK B 12% RETURN 8% RETURN Stocks A and B have betas
| STOCK | BOOM (60% CHANCE) | BUST (40% CHANCE) |
| STOCK A | 20% RETURN | 5% RETURN |
| STOCK B | 12% RETURN | 8% RETURN |
Stocks A and B have betas of 1.3 and 0.9 respectively. You are holding a portfolio consisting of 70% of stock A and 30% of stock B. The risk free rate is 1%.
WHAT IS THE SHARPE RATIO OF YOUR PORTFOLIO? USING ONE PHRASE/SENTENCE EXPLAIN WHAT THIS MEANS.
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Finance For Nonfinancial Managers
Authors: Gene Siciliano
2nd Edition
0071824367, 978-0071824361
