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

Quizplus · Accepted Answer

The Sharpe ratio is calculated as (Average return - Risk-free rate) / Standard deviation of returns. For Scooner: (19% - 6%) / 35% = 0.3714 or 37.14%.

The Following Data Are Available Relating to the Performance of Scooner