The risk-free rate is 2% and the total return on the Market Portfolio is 10%. The...
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The risk-free rate is 2% and the total return on the Market Portfolio is 10%. The risk of the Market Portfolio, measured by its standard deviation, is 18%. You are considering whether to include Stock A into your Active Portfolio: Beta Actual Return Standard Deviation Stock A 0.8 6% 15% Calculate Stock A's information ratio. (3 marks) Enter your answer to 4 decimal places eg if your answer is 0.45793 enter as 0.4579. The risk-free rate is 2% and the total return on the Market Portfolio is 10%. The risk of the Market Portfolio, measured by its standard deviation, is 18%. You are considering whether to include Stock A into your Active Portfolio: Beta Actual Return Standard Deviation Stock A 0.8 6% 15% Calculate Stock A's information ratio. (3 marks) Enter your answer to 4 decimal places eg if your answer is 0.45793 enter as 0.4579.
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The information ratio IR measures the excess return of an asset relative to a benchmark per uni... View the full answer
Related Book For
Behavioral Finance Psychology Decision-Making and Markets
ISBN: 978-0324661170
1st edition
Authors: Lucy Ackert
Posted Date:
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