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Firlakuza [10]
3 years ago
6

​A stock's average return is 10 percent. The average risk-free rate is 7 percent. The standard deviation of the stock's return i

s 4 percent, and the stock's beta is 1.5. What is the Treynor index for the stock?
Business
1 answer:
svet-max [94.6K]3 years ago
4 0

Answer:

The Treynor index for the stock will be 0.02.

Explanation:

The average return of the stock is 10%.

The average risk-free rate is 7%.

The standard deviation of the stock's return is 4%.

Stock's beta is given at 1.5.

Treynor index

= (Portfolio return- risk free return)/beta of the portfolio

=(0.10-0.07)/1.5

=0.03/1.5

=0.02

So, the Treynor index for the stock will be 0.02.

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