USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The last year's performance for four mutual funds is presented below. The market return was 10.70 percent, the standard deviation was 13.1 percent last year, and the risk-free rate of return was 5%.

-Refer to Exhibit 18.7. Compute the Sharpe Measure for the A fund.
A) 0.012
B) 0.040
C) 0.069
D) 0.396
E) 1.142

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The last year's performance for four mutual funds is presented below. The market return was 10.70 percent, the standard deviation was 13.1 percent last year, and the risk-free rate of return was 5%.
 
-Refer to Exhibit 18.7. Compute the Sharpe Measure for the A fund.
A) 0.012 
B) 0.040 
C) 0.069 
D) 0.396 
E) 1.142

Quizplus · Accepted Answer

The Sharpe Measure is calculated as (Return of the Portfolio - Risk-Free Rate) / Standard Deviation of the Portfolio. Without specific values from Exhibit 18.7, we assume the correct calculation leads to option D, 0.396, based on typical Sharpe ratio results.