Answer to Question 1:
Average Return = [0.10 + (-0.05) + 0.04] / 3
Average Return = 0.09 / 3
Average Return = 0.03 or 3.00%
Variance = [(0.10 - 0.03)^2 + (-0.05 - 0.03)^2 + (0.04 -
0.03)^2] / 2
Variance = 0.0114 / 2
Variance = 0.0057
Standard Deviation = (0.0057)^(1/2)
Standard Deviation = 0.0755 or 7.55%
Answer to Question 2:
Sharpe Ratio = (Average Return - Risk-free Rate) / Standard
Deviation
Sharpe Ratio = (0.080 - 0.016) / 0.45
Sharpe Ratio = 0.064 / 0.45
Sharpe Ratio = 0.14
please answer those two questions 1. 2. A stock you are looking at has generated the...
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last chance A stock has generated an annual average return of 8.0% with a standard deviation of 45.0% during the last 10 years. If the average risk-free rate was 1.6%, what was this stock's Sharpe Ratio? Round to two decimal places. Numeric Answer: 14.22 You are incorrect 14.22
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