The following data are available relating to the performance of Monarch Stock Fund and the market portfolio:

The risk-free return during the sample period was 4%.
What is the information ratio measure of performance evaluation for Monarch Stock Fund?
A) 1.00%
B) 280.00%
C) 44.00%
D) 50.00%
E) None of the options are correct.

Question

The following data are available relating to the performance of Monarch Stock Fund and the market portfolio:

The risk-free return during the sample period was 4%.
What is the information ratio measure of performance evaluation for Monarch Stock Fund?
A) 1.00% 
B) 280.00% 
C) 44.00% 
D) 50.00% 
E) None of the options are correct.

Quizplus · Accepted Answer

α_P = 16% - [4% + 1.15(12% - 4%)] = 2.8%; α_P/σ(eP) = 2.8%/1% = 2.8, or 280%.

The Following Data Are Available Relating to the Performance of Monarch