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Kitty [74]
3 years ago
13

The following data are available relating to the performance of Wildcat Fund and the market portfolio: Wildcat Market Portfolio

Average return 18 % 15 % Standard deviations of returns 25 % 20 % Beta 1.25 1.00 Residual standard deviation 2 % 0 % The risk-free return during the sample period was 7%. What is the information ratio measure of performance evaluation for Wildcat Fund
Business
1 answer:
alekssr [168]3 years ago
5 0

Answer:

50.0%

Explanation:

The computation of the information ratio is as follows

Information ratio = Alpha ÷ residual standard deviation

where,

Alpha is

= Average rate of return - required rate of return

The average rate of return is 18%

And the required rate of return is

= Risk-free rate + Beta × (Market rate of return - Risk-free rate)

= 7% + 1.25 × (15% - 7%)

= 17%

So, the alpha is

= 18% - 17%

= 1%

Therefore the information ratio is

= 1% ÷ 2%

= 50.0%

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Answer:

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Y(X)=AX^{2}+ BX+C

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Vertex(X)=\frac{-B}{2A}

In our case, A= -65; B= 1,247.5, so, all should look like this:

Vertex (X)=\frac{-(1247.50}{2(-65)} =9.6

That means, we need to make 9.6 increments of $1 in order to obtain the max revenue possible, therefore, the price would be

Price = $8.50 + $1(9.6)= $8.50 + $9.6 =$18.10

Best of luck.

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Answer:

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