The riskfree asset has a return of 4%. Stock B has an expected return of 16% and

Question

The riskfree asset has a return of 4%.
Stock B has an expected return of 16% and standard deviation of 35%.
Form a portfolio with standard deviation of 17.5%

The riskfree asset has a return of 4%.
Stock B has an expected return of 16% and a standard deviation of 35%.
What is the Sharpe ratio of stock B?

A.The weight of the riskfree asset is 1; the weight of stock B is 0. B.The weight of the riskfree asset is 0.75; the weight of stock B is 0.25. C.The weight of the riskfree asset is 0.5; the weight of stock B is 0.5. D.The weight of the riskfree asset is 0.25; the weight of stock B is 0.75. E.The weight of the riskfree asset is 0; the weight of stock B is 1.

Explanation / Answer

D.The weight of the riskfree asset is 0.25; the weight of stock B is 0.75.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.