The Mark IV Fund had a rate of return of 21% last year.If its beta weight was +0.6 and if the return on the overall market was 12%,its risk adjusted rate of return,RAROR,is
A)+19.5%.
B)- 3.0%.
C)+23.0%.
D)+ 2.0%.

Question

Quizplus · Accepted Answer

RAROR = Risk-free rate + Beta * (Market return - Risk-free rate)
Assuming the risk-free rate is 0, RAROR = 0.6 * (12% - 0%) + 21% = 23.2%
Therefore, the closest answer choice is C, which is +23.0%.

The Mark IV Fund Had a Rate of Return of 21