The following data are available relating to the performance of Long Horn Stock Fund and the market portfolio: The risk-free return during the sample period was 6%.
What is the Treynor measure of performance evaluation for Long Horn Stock Fund?
A)1.33%
B)4.00%
C)8.67%
D)31.43%

Question

The following data are available relating to the performance of Long Horn Stock Fund and the market portfolio:  The risk-free return during the sample period was 6%.
What is the Treynor measure of performance evaluation for Long Horn Stock Fund?
A)1.33% 
B)4.00% 
C)8.67% 
D)31.43%

Quizplus · Accepted Answer

Treynor performance measure = (Rp - Rf) / βp
where Rp = return of Long Horn Stock Fund
       Rf = risk-free rate
       βp = beta of Long Horn Stock Fund
       
Given, 
Rp = 16%
Rf = 6%
βp = 1.5 (from the data provided)
Treynor measure = (16% - 6%) / 1.5 = 8.67% 
Therefore, the Treynor measure of performance evaluation for Long Horn Stock Fund is 8.67%. Choice C is the only option that matches this calculated value.

The Following Data Are Available Relating to the Performance of Long