Your portfolio has a beta of 1.24, a standard deviation of 14.3 percent, and an expected return of 12.5 percent. The market return is 11.3 percent and the risk-free rate is 3.1 percent. What is the Treynor ratio?
A) .015
B) .076
C) .109
D) .482
E) .510

Question

Quizplus · Accepted Answer

The Treynor ratio is calculated as (Expected Return - Risk-Free Rate) / Beta. Here, it is (12.5% - 3.1%) / 1.24 = 0.076.

Your Portfolio Has a Beta of 1