Assume a second firm that evaluates portfolios uses the Treynor approach to measuring performance. The firm is
Question:
a. Using the Treynor approach, how would the second firm rank the three portfolios? (Round to three places to the right of the decimal point.)
b. Explain why any differences have taken place in the rankings between problems 1 and 2a .
c. If the Treynor approach is utilized and the market return is 10 percent (with a risk-free rate of 7 percent), which of the portfolios outperformed the market? The market beta is always 1.
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Related Book For
Fundamentals of Investment Management
ISBN: 978-0078034626
10th edition
Authors: Geoffrey Hirt, Stanley Block
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