Question: Testbank, Question 50 The expected returns for Securities ABC and XYZ are 8 percent and 13 percent, respectively. The standard deviation is 12 percent for

Testbank, Question 50

The expected returns for Securities ABC and XYZ are 8 percent and 13 percent, respectively. The standard deviation is 12 percent for ABC and 18 percent for XYZ. There is no relationship between the returns on the two securities. The market return is 12.5 percent with a standard deviation of 16 percent. The risk-free rate is 5 percent. What is the Sharpe ratio of a portfolio with 40 percent of the funds in ABC and 60 percent in XYZ?

0.47

0.51

0.75

0.93

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Consider the following information: Rate of Return if State Occurs State of Economy Boom :57 Bust of Economy .66 .34 Probability of State Stock A .09 .13 Stock B Stock C .03 .19 .24 -.04 a. What is...

This question is different from the one already in this app( the numbers are different)

The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...

please show workings Question 28 The expected returns for Securities ABC and XYZ are 8 percent and 13 percent, respectively. The standard deviation is 12 percent for ABC and 18 percent for XYZ. There...

Need help with this question: The expected returns for Securities ABC and XYZ are 8 percent and 13 percent, respectively. The standard deviation is 12 percent for ABC and 18 percent for XYZ. There is...

The expected returns for Securities ABC and XYZ are 8% and 13%, respectively. The standard deviation is 12% for ABC and 18% for XYZ. There is no relationship between the returns on the two...

A3Q10 The expected returns for Securities ABC and XYZ are 8% and 13%, respectively. The standard deviation is 12% for ABC and 18% for XYZ. There is no relationship between the returns on the two...

The expected returns for Securities ABC and XYZ are 8% and 13%, respectively. The standard deviation is 12% for ABC and 18% for XYZ. There is no relationship between the returns on the two...

Charlotte Ventures is thinking of a $6 million convertible preferred investment in a startup, structured as 5 million shares. The founders of the startup hold 10 million common shares. There's a 30%...

How are desired consumption and desired saving affected by increases in current income, expected future income, and wealth?

7 1 0 x 2 ( x 3 - 7 ) 3 d x Exnlain vour

Show the steps for removing key 16 from the heap of Figure 5.6. Figure 5.6. 5 15 20 (16 (25 (14 (12 (11 8

An asset is similar to an expense. In what ways in this true or untrue?

Outline the structure and functions of: (a) The IFRS Foundation. (b) The International Accounting Standards Board (IASB). (c) The IFRS Advisory Council. (d) The IFRS Interpretations Committee.

What amount, 1 1/2 if years from now, is equivalent to $7000 due in 8 years if money can earn 5.2% compounded semiannually?

Professor Stewart is consulting for the president of a corporation that is planning a company party. The company has a hierarchical structure, that is, the supervisor relation forms a tree rooted at...

Design a minimum-mass symmetric three-bar truss (the area of member 1 and that of member 3 are the same) to support a load P, as was shown in Fig. 2.9. The following notation may be used: Pu = P cos...

14.16 When coastal power stations take in large quantities of cooling water, it is inevitable that a number of fish are drawn in with the water. Various methods have been designed to screen out the...

2. Fit each of the following regression models: i. y with x1 ii. y with x1 and x2 iii. y with x1 and x2 and x3 iv. y with x1 and x2 and x3 and x4

13.28 Exercise 13.21 gave data on x 5 nerve firing frequency and y 5 pleasantness rating when nerves were stimulated by a light brushing stroke on the forearm. The x values and the corresponding...