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

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

Quizplus · Accepted Answer

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

The Following Data Are Available Relating to the Performance of Monarch