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
What is the Sharpe ratio of the best feasible CAL?
The question is complete to find the Sharpe ratio of the best feasible CAL you need to calculate
Sharpe ratio for stock fund:
Sharpe ratio for Bond fund:
The higer number is considered the best feesable CAL
Note market rate yeilds a sure rate of 5.5%
![Required information
[The following information applies to the questions displayed below.]
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term
government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The
probability distributions of the risky funds are:
Expected Return
16%
Standard Deviation
Stock fund (S)
Bond fund (B)
32%
10%
23%
The correlation between the fund returns is 0.20.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F623e2689-743b-4fcc-b895-9164ac0fd9cd%2F4fc3e316-82b1-4465-a801-f674d3f49b05%2F7i6dfmw_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term
government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The
probability distributions of the risky funds are:
Expected Return
16%
Standard Deviation
Stock fund (S)
Bond fund (B)
32%
10%
23%
The correlation between the fund returns is 0.20.
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