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13 June, 03:20

Suppose two portfolios have the same average return, the same standard deviation of returns, but Buckeye Fund has a higher beta than Gator Fund. According to the Sharpe measure, the performance of Buckeye Fund A. is better than the performance of Gator Fund. B. is the same as the performance of Gator Fund. C. is poorer than the performance of Gator Fund. D. cannot be measured as there is no data on the alpha of the portfolioE. none of the above is true.

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  1. 13 June, 03:59
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    The correct answer is letter "B": is the same as the performance of Gator Fund.

    Explanation:

    Named after American economist William F. Sharpe (born in 1934), the Sharpe ratio is the average return obtained over the risk-free rate per unit of total risk. The Sharpe Ratio is calculated subtracting the risk-free rate from the return of the portfolio and dividing that result between the standard deviation of the portfolio's excess return.

    In that case, if both Buckeye and Gator funds have the same average return and standard deviation returns their performance should be similar.
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Home » Business » Suppose two portfolios have the same average return, the same standard deviation of returns, but Buckeye Fund has a higher beta than Gator Fund. According to the Sharpe measure, the performance of Buckeye Fund A.
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