The table below presents performance data for the Socially Responsible mutual fund over the last five years. The table also includes information on the returns of the market index and T-Bills over the same period. What is the Treynor Index for Socially Responsible? $$\begin{array} { | c | c | c | c | }
\hline & \begin{array} { c }
\text { Average } \
\text { Retum }
\end{array} & \begin{array} { c }
\text { Standard } \
\text { Deviation }
\end{array} & \text { Beta } \
\hline \begin{array} { c }
\text { Socially } \
\text { Responsible }
\end{array} & 13 \% & 37.5 \% & 3 \
\hline \text { Market } & 6 \% & 15 \% & 1 \
\hline \text { T-Bills } & 1.5 \% & \text { N/A } & \text { N/A } \
\hline
\end{array}$$
A)2.3%
B)3.8%
C)7.0%
D)9.5%
E)11.5%

Question

The table below presents performance data for the Socially Responsible mutual fund over the last five years. The table also includes information on the returns of the market index and T-Bills over the same period. What is the Treynor Index for Socially Responsible? $$\begin{array} { | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Average } \
\text { Retum }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Deviation }
\end{array} & \text { Beta } \
\hline \begin{array} { c } 
\text { Socially } \
\text { Responsible }
\end{array} & 13 \% & 37.5 \% & 3 \
\hline \text { Market } & 6 \% & 15 \% & 1 \
\hline \text { T-Bills } & 1.5 \% & \text { N/A } & \text { N/A } \
\hline
\end{array}$$
A)2.3%
B)3.8%
C)7.0%
D)9.5%
E)11.5%

Quizplus · Accepted Answer

The Treynor Index is calculated as (Rp - Rf) / Beta, where Rp is the return of the portfolio, Rf is the risk-free rate, and Beta is the beta of the portfolio. In this case, Rp = 13%, Rf = 1.5%, and Beta = 3. Therefore, the Treynor Index = (13% - 1.5%) / 3 = 3.8%.

The Table Below Presents Performance Data for the Socially Responsible