The risk-free interest rate in each of these years was as follows: a. Calculate the average return
Question:
The risk-free interest rate in each of these years was as follows:
.png){kind=small}
a. Calculate the average return and standard deviation of returns for Ms. Sauros’s portfolio and for the market. Use these figures to calculate the Sharpe ratio for the portfolio and the market. On this measure did Ms. Sauros perform better or worse than the market?
b. Now calculate the average return that you could have earned over this period if you had held a combination of the market and a risk-free loan. Make sure that the combination has the same beta as Ms. Sauros’s portfolio. Would your average return on this portfolio have been higher or lower? Explain yourresults.
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
Step by Step Answer:
a 2003 2004 2005 2006 2007 Average SD Sharpe Ratio Sauros 391 110 26 180 23 146 152 077 SP500 316 12...View the full answer
Principles of Corporate Finance
ISBN: 978-0077404895
10th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen
