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Basic Question 2 of 13
The mean return in 2011 for a stock mutual fund of midsize companies was 5.3% and the mean return for a risk-free bond was 1.0%. If the Sharpe measure for the mutual fund is 2, what is the standard deviation of the stock mutual fund?
B. 3.15
C. 4.34
A. 2.15
B. 3.15
C. 4.34
User Contributed Comments 5
| User | Comment |
|---|---|
| TammTamm | When in doubt, plug each answer into the formula until you get the correct answer. Example 5.3-1/X=2 A. 5.3-1/2.15=2 B. 5.3-1/3.15=1.365 C. 5.3-1/4.34=.9907 D. 5.3-1/6.37=.675 The answer is A. Just a note to help. |
| Meka76 | It would also be good to know how to convert any formula: Sharpe Ratio=(Rp-Rf)/portfolio standard deviation Portfolio standard deviation = (Rp-Rf)/Sharpe ratio |
| RCapistrano | Set up the equation and solve for the unknown "x". 5.3-1/X=2 x = 4.3/2 x = 2.15 |
| 2014 | after u minus return - risk u look at possible answers givn in question and just select |
| davidt87 | 2.15*%* |
I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt
Learning Outcome Statements
calculate and interpret the information ratio (ex post and ex ante) and contrast it to the Sharpe ratio;
CFA® 2025 Level II Curriculum, Volume 6, Module 38.