Question

1. Two portfolios have the same returns and standard deviations, but Portfolio A has a higher beta than Portfolio B. Applying the Sharpe ratio:

   		a. The Sharpe ratio for Portfolio A is greater than Portfolio B.
   		b. The Sharpe ratio for Portfolio A is less than Portfolio B.
   		c. The Sharpe ratio for Portfolio A is equal to Portfolio B.
   		d. None of the above.

QUESTION 18

1. Maggie is a portfolio manager who consistently earns a high Sharpe ratio. Her forecasting ability is which of the following?

   		a. Above average.
   		b. Average.
   		c. Below average.
   		d. Irrelevant to her Sharpe ratio.

Answer 1

Hello Sir/ Mam

Q - 1 - YOUR REQUIRED ANSWER IS OPTION C : Equal

RI-R Sharpe Ratio = S.D.R.

Given that mean and S.D. of the portfolios are same, hence, sharpe ratio will also be equal.

Q - 2 - YOUR REQUIRED ANSWER IS OPTION A : ABOVE AVERAGE

Earning a higher Sharpe Ratio means earning a higher average return with same amount of risk. Hence, forecasting abilities are great.

I hope this solves your doubt.

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