Question
Use the following data to answer the question regarding the performance of Guardian Stock Fund and the market portfolio. The risk-free return during the sample
Use the following data to answer the question regarding the performance of Guardian Stock Fund and the market portfolio. The risk-free return during the sample period was 5%.
Guardian | Market Portfolio | |||||||||
Average return | 14 | % | 10 | % | ||||||
Standard deviation of returns | 26 | % | 21 | % | ||||||
Beta | 1.2 | 1 | ||||||||
Residual standard deviation | 4 | % | 0 | % | ||||||
Calculate the information ratio measure of performance for Guardian Stock Fund. (Round your answer to 2 decimal places. Do not round intermediate calculations.)
Suppose you buy 350 shares of Applied Materials Corporation at the beginning of year 1 for $43.25 per share. Applied Materials Corporation pays no dividends. The stock price at the end of year 1 is $47.25, the price is $55.25 at the end of year 2, and the price is $63.25 at the end of year 3. The stock price declines to $60.25 at the end of year 4, and you sell your 350 shares.
What is your geometric average return for the 4-year period? (Round your answer to 2 decimal places. Do not round intermediate calculations.)
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