. Risk-Adjusted Return Measurements Assume the following information over a five

Question

. Risk-Adjusted Return Measurements 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 according to the Sharpe index. Which stock has higher risk-adjusted returns according                    to the Treynor index? Show your work.

2. Measuring Expected Return Assume Mess stock has a beta of 1.2. If the risk-free rate is 7 percent and the market return is 10 percent, what                    is the expected return of Mess stock?

a. At the present time, the price

Explanation / Answer

. Risk-Adjusted Return Measurements Assume the following information over a five

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