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I’m new to financial management. I have a problem which I have been trying to solve but I’m not getting anyway: I goes
stock A Stock B Stock C (Risk free)
Average return 7% 15% 2%
Variance of Return 0.0064 0.0196
Sigma of return 8% 14%
Covariance of returns 0.0011Required:Using the above information, calculate:
(a) Expected market portfolio return E(Rm)
(b) Market excess return
(c) The sharpe ratioThank you for your help
This is not examinable in Paper F9.
However if you watch the P4 lectures on portfolio theory and on CAPM then they will show you how to answer parts (a) and (b).
The Sharpe ratio is not examinable in any ACCA exams (and so I am puzzled where you found this question – if you are studying for some other exams then surely your tutor has explained). However, once you have calculated parts (a) and (b), then it is easy – you can find out what it is using Google.
Good morning John,
You are right this question not an ACCA paper but just thought I might get more explanation.
Thanks for your time.
Lee
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