years equity bonds money market market index

1 20%. 8% 3% 15%

2 12% 5% 3% 10%

3 -5% -3% -1.5% -5%

4. 12% 6% 4% 8%

5 15% 7.5% 2.5% 12%

risk free: 2% 2% 2% 2%

beta: 1.21. 0.57. 0.24 1

variance 0.0089. 0.0020. 0.0005. 0.0060

Calculate the following for each Asset Class and the Market Index to one decimal place:

1. Average actual return (Return)
2. Standard deviation
3. Sharpe ratio (Sharpe)
4. Capital Asset Pricing Model return (CAPM)
5. Alpha
6. Which is the best Asset Class and why, based on the calculations?