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
Related questions
Question
A. Based on the Sharpe ratio, which fund displays superior performance?
B. Suppose you are an investment counselor with a new client, Jonsey, and that Funds A and B are the only options available in Jonsey's company sponsored retirement account. Jonsey has no other investments. Which fund would you recommend, and why?
C. What additional evidence would make you more confident in your recommendation, that is, more confident that the fund you recommend has the ability to perform in the future? (Hint: The answer has nothing to do with the Treynor Index.)
Transcribed Image Text:Fund
or
Standard
Sharpe
Return Deviation
Asset
(%)
(%)
Beta
Alpha
Ratio
Riskfree
4
Market
10
18
0.33
Fund A
6.
12
0.2
0.8
0.17
Fund B
11
20
1.3
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