Assume the following information over a five-year period. Average risk-free rate = 6% Average return
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Assume the following information over a five-year period.
• Average risk-free rate = 6%
• Average return for Crane stock = 11%
• Average return for Load stock = 14%
•Standard deviation of Crane stock returns = 2%
• Standard deviation of Load stock returns = 4%
• Beta of Crane stock = 0.8
• Beta of Load stock = 1.1
Determine which stock has higher risk-adjusted returns according to the Sharpe Index. Which stock has higher risk-adjusted returns according to the Treynor Index? Show your work.
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