The following data are available relating to the performance of Long Horn Stock Fund and the market portfolio: $$\begin{array} { | l | l | l | }
\hline & \text { Long Horn } & \text { Market Portfolio } \
\hline \text { Average Return } & 19 \% & 12 \% \
\hline \text { Standard Deviation of Returns } & 35 \% & 15 \% \
\hline \text { Beta } & 1.5 & 1.0 \
\hline \text { Residual standard deviation } & 3.0 \% & 0.0 \% \
\hline
\end{array}$$ The risk-free return during the sample period was 6%.
-What is the Treynor measure of performance evaluation for Long Horn Stock Fund?
A)1.33%
B)4.00%
C)8.67%
D)31.43%
E)37.14%

Question

The following data are available relating to the performance of Long Horn Stock Fund and the market portfolio: $$\begin{array} { | l | l | l | } 
\hline & \text { Long Horn } & \text { Market Portfolio } \
\hline \text { Average Return } & 19 \% & 12 \% \
\hline \text { Standard Deviation of Returns } & 35 \% & 15 \% \
\hline \text { Beta } & 1.5 & 1.0 \
\hline \text { Residual standard deviation } & 3.0 \% & 0.0 \% \
\hline
\end{array}$$ The risk-free return during the sample period was 6%.
-What is the Treynor measure of performance evaluation for Long Horn Stock Fund?
A)1.33%
B)4.00%
C)8.67%
D)31.43%
E)37.14%

Quizplus · Accepted Answer

The Treynor measure is calculated as (Average Return - Risk-Free Rate) / Beta. For Long Horn Stock Fund, it is (19% - 6%) / 1.5 = 8.67%.

The Following Data Are Available Relating to the Performance of Long