Morgan stock has an average return minus the average risk-free rate of 12.5 percent, a beta of 2.5, and a standard deviation of returns of 20 percent. The Treynor index of Morgan stock is
A)0.0625.
B)0.05.
C)0.35.
D)0.03.
E)None of these are correct.

Question

Quizplus · Accepted Answer

The Treynor index is calculated as (Average Return - Risk-Free Rate) / Beta. Here, it is 12.5% / 2.5 = 0.05.

Morgan Stock Has an Average Return Minus the Average Risk-Free