6. HW 3 Consider the following returns for two investments, A and B, over the pa

Question

6. HW 3

Consider the following returns for two investments, A and B, over the past four years:

Calculate the mean for each investment. (Round your answers to 2 decimal places.)

Which investment provides the higher return?

Calculate the standard deviation for each investment. (Round your answers to 2 decimal places.)

Which investment provides less risk?

Given a risk-free rate of 1.2%, calculate the Sharpe ratio for each investment. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Consider the following returns for two investments, A and B, over the past four years:

Explanation / Answer

from above:

a-1) mean :

a-2) investment provides the higher return ---investment 2

b-1)

b-2) Which investment provides less risk --investment 1

c-1)

as we know that sharpe ratio =(return -risk free rate)/std deviation

therefore

c-2) Which investment has performed better-Investment 2

Investment 1: Investment 2: 2% 6% 8% 12% -4% -8% 6% 10% total 12% 20% mean=total/4 3% 5%

Related Questions

Navigate

• Browse (All)
• Browse 6
• Subjects

---

---

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