You manage a portfolio consisting of stocks in three companies and wish to evaluate its performance over
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Question:
The risk-free rate of return is 2.35% p.a.
Required:
i. Calculate the M2 for your portfolio.
ii. Provide a graphical representation of M2 in risk-return space, which illustrates the performance of your portfolio relative to the market. Ensure you correctly label the axes and present any lines and points which are relevant.
iii. Calculate the Sharpe measure, and the Treynor measure, for both your portfolio and the market portfolio.
iv. Based on your findings from the above, did your portfolio outperform the market? In your answer, describe and interpret the measures calculated and their relevance to your decision.
Related Book For
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston
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