Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are working as an assistant to the manager of a fund that is very well diversified. The manager has asked you to suggest which

You are working as an assistant to the manager of a fund that is very well diversified.

The manager has asked you to suggest which of the following stocks that should be included in the portfolio, based on an appropriate measure.

If t-bills generates a return of 2.5 %, which of the following stocks is best suited to be included into the portfolio, and why?

E(r)

Iano

8.1 %

37.6 %

1.7

Back

8.4 %

14.6 %

1.9

Hanc

8.1 %

22.6 %

1.8

(In the computations displayed in the answers, percentages are represented in decimal version.)

Select one:

a. The Iano stock is preferred since it's Treynor measure of 0.048 is the highest one.

b. The Hanc stock is preferred since both the Sharpe and the Treynor measure is better than for the other stocks

c. The Back stock is preferred since it's Treynor measure of 0.031 is the highest one.

d. The Iano stock is preferred since it's Treynor measure of 0.033 is the highest one.

e. The Back stock is preferred since it's Sharpe measure of 0.257 is the best one

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

Capital As Power

Authors: Jonathan Nitzan, Shimshon Bichler

1st Edition

0415496802, 978-0415496803

More Books

Students also viewed these Finance questions

Question

What are the objectives of Human resource planning ?

Answered: 1 week ago

Question

Explain the process of Human Resource Planning.

Answered: 1 week ago