The following data are available relating to the performance of Monarch Stock Fund and the market portfolio: $\begin{array}{lcc}
& \text { Monarch } & \text { Market } \
&&\text { Portfolio }\
\text { Average return } & 16 \% & 12\% \
\text { Standard deviations of returns } & 26\% & 22\% \
\text { Beta } & 1.15 & 1.00 \
\text { Residual standard deviation } &1 \% & 0 \%
\end{array}$
The risk-free return during the sample period was 4%.
Calculate Treynor's measure of performance for Monarch Stock Fund.
A) 10.40%
B) 8.80%
C) 44.00%
D) 50.00%

Question

The following data are available relating to the performance of Monarch Stock Fund and the market portfolio: $\begin{array}{lcc} 
& \text { Monarch } & \text { Market } \ 
&&\text { Portfolio }\
\text { Average return } & 16 \% & 12\% \
\text { Standard deviations of returns } & 26\% & 22\% \
\text { Beta } & 1.15 & 1.00 \
\text { Residual standard deviation } &1 \% & 0 \%
\end{array}$
 The risk-free return during the sample period was 4%.
Calculate Treynor's measure of performance for Monarch Stock Fund.
A) 10.40%
B) 8.80%
C) 44.00%
D) 50.00%

Quizplus · Accepted Answer

Treynor's measure is calculated as (Average return - Risk-free return) / Beta. For Monarch Stock Fund, it is (16% - 4%) / 1.15 = 10.40%.

The Following Data Are Available Relating to the Performance of Monarch