**Question:**Asset A has an expected return of 14% and a standard deviation of 20%. The risk-free rate is 8%. What is the reward-to-variability ratio?**Input Box:**[__________] **Explanation:** The reward-to-variability ratio, also known as the Sharpe ratio, measures the excess return per unit of risk. It is calculated using the formula:\[ \text{Sharpe Ratio} = \frac{\text{Expected Return of the Asset} - \text{Risk-Free Rate}}{\text{Standard Deviation of the Asset}} \]In this case, you would plug in the values to find the ratio for Asset A.

The reward-to-variability ratio (also called the Sharpe ratio) refers to the measure of the return…

Answered: Asset A has an expected return of 14%…

Asset A has an expected return of 14% and a standard deviation of 20%. The risk-free rate is 8%. What is the reward-to-variability ratio?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Asset A has an expected return of 20% and a standard deviation of 25%. The risk free rate is 10%. What is the reward-to- variability ratio (Sharpe ratio)? O 40 O .50 O .75 O.80
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What is the beta of IsoTech, given that the covariance between IsoTech and the market is 0.1 and the standard deviation of market returns is 51%?
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The following provides information regarding Assets X and Y. Calculate the expected rate of return, variance, standard deviation, and coefficient of variation for the two assets. Which asset is a better investment?
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In this question, you will be asked to calculate the variance/risk of a portfolio consisting of two assets. Consider a portfolio that only consists of asset E and asset B. E has weight of 60%, and B has weight of 40%. The variance of E is about 13%, and the variance of B is about 4%. The covariance between E and B is about 0.2. What is the variance of this portfolio? 0.1492 O 0.1012 0.19 0.094

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