I have a risky asset that can generate 25% return in case of the good condition, 10%

Fantastic news! We've Found the answer you've been seeking!

Question:

I have a risky asset that can generate 25% return in case of the good condition, 10% in case of normal condition, and -5% in case of the bad condition. Assuming the risk free rate is 3%, what would be the Sharpe ratio of the risky asset?

Related Book For answer-question

Multinational Finance Evaluating Opportunities Costs and Risks of Operations

ISBN: 978-1118270127

5th edition

Authors: Kirt C. Butler

See More Books

Posted Date: Apr 27, 2023 03:18 AM

See More Questions

1 If your client is not knowledgeable about the market, you should ____ versus comparable portfolios. increase the frequency of trading increase the risk of the portfolio decrease your time with the...
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
26. With its current leverage, Impi Corporation will have net income next year of 4.5 million. If Impis corporate tax rate is 35% and pay 8% interest on its debt, how much additional debt can Impi...
A trader has a soft limit of $8MM USD and a hard limit of $10MM USD. Their current NOP is $3MM USD. They purchase $6MM USD, sell $1MM USD, and then purchase another $5MM USD. Which of the following...
Using an artificial variable, minimize f = 2x1 x2 subject to x1 > 0, x2 > 0, x1 + x2 > 5 x1 + x2 < 1, 5x1 + 4x1 < 40.
Why is it important to document contract changes? Why should project teams be watchful for constructive change orders?
What are two examples of voluntary deductions from an employee's gross pay?
The Great Outdoors Clothing Company, a mail-order catalogue operation, contracts with the Federal Parcel Service to deliver all of its orders to customers. As such, Great Outdoors considers Federal...
Please read the case study and answer the question below Case study : https://services.hbsp.harvard.edu/api/courses/953946/items/W17371-PDF-ENG/sclinks/55168b1ef83d5f546383f322f09f6e5a Questions : 1....
George Littlechild started a new kitchen and bath design business called Littlechild Enterprises. The following activities occurred during its first month of operations, March 2020: a. Littlechild...
How do ecological disturbances, such as wildfires, invasive species invasions, and disease outbreaks, interact with ecosystem structure and function, and what are the implications for ecosystem...
(4) 3. Jessica invests $6300 at 5% per annum compounded semi-annually. Samantha invests $4200 at 9% per annum compounded monthly. Determine when the values of the investments will be the same. Keep...
Dana can clean a house in 6 hours. Tommy can lean the same house in 10 hours. At this rate, how many hours will it take Dana and Tommy, working together, to clean 4 houses?
A loan officer compares the interest rates for 48-month fixed-rate auto loans and 48-month variable-rate auto loans. Two independent, random samples of auto loan rates are selected. Use the excel...
Look at this fact sheet by the Sentencing Project (2023) on A Second Look at Long Term Imprisonment in Michigan. How punitive are Michigan's sentencing policies compared to national trends?...
Listen to the two video clips about Kim Davis, and read the short article about how much she cost taxpayers Kim Davis's Videos and article A. https://www.youtube.com/watch?v=ZgQzGkHgR_k (5:22) B....
Provide an example of an organization or organizational process that represents the systems perspective.
For the vector whose polar components are (Vr = 1, VÎ¸ = 0), compute in polars all components of the second covariant derivative VÎ±;Î¼;Î½. To find...
If a shipment of Pilsner Urquell from the Czech Republic costs 345,628 korunas and the spot exchange rate is 33.24 korunas per euro, what should be the price of the shipment in euros?
What function does a firm's strategic business plan perform?
What is exogenous uncertainty? What is endogenous uncertainty? What difference does the form of uncertainty make to the timing of investment?
Match each of the following terms 1 through 4 with the most appropriate description, a through d. In addition, match each of the terms 1 through 4 with an example, e through h. Term 1. Detector 2....
A partially completed performance report for Quasar Robotics, Inc., is in the Working Papers. Quasar Robotics, Inc., has just completed its first quarter of the fiscal year ended December 31, 20X3....
Match each of the following roles of a cost management system, 1 through 6 , with the most appropriate example, a through $f$. Cost Management System Role 1. Develop accurate product/ service costs...

I have a risky asset that can generate 25% return in case of the good condition, 10%

Question:

Expert Answer:

To calculate the Sharpe ratio of the risky asset we need to use the formula Sharpe ratio Expected return of the risky asset Riskfree rate Standard dev... View the full answer

Multinational Finance Evaluating Opportunities Costs and Risks of Operations

Students also viewed these accounting questions