Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The expected returns for Securities ABC and XYZ are 8 percent and 13 percent, respectively. The standard deviation is 12 percent for ABC and 18

The expected returns for Securities ABC and XYZ are 8 percent and 13 percent, respectively. The standard deviation is 12 percent for ABC and 18 percent for XYZ. There is no relationship between the returns on the two securities. The market return is 12.5 percent with a standard deviation of 16 percent. The risk-free rate is 5 percent. What is the Sharpe ratio of a portfolio with 40 percent of the funds in ABC and 60 percent in XYZ?

A)0.47

B)0.51

C)0.75

D)0.93

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

Step: 3

blur-text-image

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

International financial management

Authors: Jeff Madura

13th edition

978-1337099738, 1337099732, 9781337515894, 1337515892, 978-1337587211

More Books

Students also viewed these Finance questions

Question

What is the unauthorized practice of law?

Answered: 1 week ago

Question

a. What department offers the course?

Answered: 1 week ago

Question

How do you add two harmonic motions having different frequencies?

Answered: 1 week ago