Phil has a portfolio with a 13.2% total return. The beta of the portfolio is 1.48 and the standard deviation is 13%. Currently, the risk- free rate of return is 4% and the overall market has a total return of 11%. What is the value of Treynor's measure for Phil's portfolio?
A) 7.1%.
B) 8.9%.
C) 6.2%.
D) 2.1%.

Question

Quizplus · Accepted Answer

Treynor's measure is calculated as (Portfolio Return - Risk-Free Rate) / Portfolio Beta. For Phil's portfolio, it is (13.2% - 4%) / 1.48 = 6.216%, which rounds to 6.2%.

Phil Has a Portfolio with a 13