Higher risk-adjusted returns


Problem:

Assume the following information over a five year period:

Average risk free rate = 6%
Average return for crane stock = 11%
Average return for load stock = 14%
Standard deviation of crane stock returns = 2%
Standard deviation of load stock returns = 4%
Beta of crane stock = 0.8
Beta of load stock = 1.1

Determine which stock has higher risk-adjusted returns when using the Sharpe index. Which stock has higher risk-adjusted returns when using the treynor index? Please show work.

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Finance Basics: Higher risk-adjusted returns
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