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Niki Malones portfolio earned a return of 11.8% during the year just ended. The portfolios standard deviation of return was

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Niki Malone’s portfolio earned a return of 11.8% during the year just ended.
The portfolio’s standard deviation of return was 14.1%. The risk-free rate is currently 6.2%.
During the year, the return on the market portfolio was 9.0% and its standard deviation was 9.4%.
a. Calculate Sharpe’s measure for Niki Malone’s portfolio for the year just ended.
b. Compare the performance of Niki’s portfolio found in part a to that of Hector Smith’s portfolio, which has a Sharpe’s measure of 0.43. Which portfolio performed better? Why?
c. Calculate Sharpe’s measure for the market portfolio for the year just ended.
d. Use your findings in parts a and c to discuss the performance of Niki’s portfolio relative to the market during the year just ended.
Portfolio
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...

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Fundamentals of Investing

Fundamentals of Investing

ISBN: 978-0133075359

12th edition

Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk

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Question Posted: April 28, 2015 03:51:15
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