We expect to have our stock portfolio to return 11 next


Sharpe Ratio:

a) We expect to have our stock portfolio to return 11% next year. The return on the risk-free T-bills is 3.2% and our portfolio has 5% standard deviation. What is the Sharpe ratio?

b) Stock portfolio A has a Sharpe ratio of 1.6 and an expected return of 10%. An alternative stock portfolio B has a Sharpe ratio of 1.2 and an expected return of 10%. In which one should you invest?

c) Stock portfolio A has a Sharpe ratio of 1.6 and an expected return of 10%. An alternative stock portfolio C has a Sharpe ratio of 1.6 and an expected return of 11%. In which one should you invest?

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Financial Management: We expect to have our stock portfolio to return 11 next
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