Suppose a portfolio is expected to earn 15 while you

Suppose a portfolio is expected to earn 15% while you expect the market to return 14%. The
standard deviation of your portfolio is 20%. The current risk-free rate is 4%. The Sharpe Ratio
for your portfolio is ____________
0.75
0.50
0.55
0.05
The excess of the interest rate over the inflation rate is called the Input Field 1 of 1 real unavailable
correct
real
interest rate.The growth rate of purchasing power derived from an investment.
The portfolio choice among broad investment classes is known as Input Field 1 of 1 capital unavailable
incorrect
asset
allocation.

In scenario analysis, the HPR is calculated by computing:
arithmetic average return over the considered period
weighted-average of returns in all possible outcomes
dollar-weighted return
geomentric average return over the considered period
The overall portfolio composed of the risk-free asset and the risky portfolio is called the Input Field 1 of 1
complete unavailable correct
complete
portfolio and it includes the entire investor's wealth.
Which of the following statements is incorrect?
Since a Treasury Bond is default-free it is, by implication, risk-free as well. Which of the following statements about risk-averse investors is correct?

True or false: Finding the available combinations of risk and return is the "technical" part of
capital allocation; it deals only with the opportunities available to investors.
True
False
Rationale:
available combination of risk and return is the technical part
The Sharpe ratio of a portfolio is
the portfolio risk premium divided by the standard deviation of the portfolio's excess return
the market risk premium divided by the standard deviation of the portfolio's excess return
the portfolio return divided by the standard deviation of the market's excess return
the portfolio's return divided by the standard deviation of the portfolio's excess return
True or false: The capital allocation line is the plot of all the risk-return combinations available
to investors.
True
False
Rationale:
The capital allocation line is the plot of all the risk-return combinations available to investors.
A simple strategy to control portfolio risk is to specify the fraction of the portfolio invested in broad asset
classes such as stocks, bonds, and safe assets such as Treasury bills. This aspect of portfolio management
is called Input Field 1 of 2 asset unavailable correct
asset
Input Field 2 of 2 allocation
unavailable correct
allocation
.