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%.
Calculate the information ratio 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%.
Calculate the information ratio for Long Horn Stock Fund.
A)1.33 
B)4.00 
C)8.67 
D)31.43

Quizplus · Accepted Answer

Information ratio = (Long Horn Stock Fund return - Market portfolio return) / tracking error

- Long Horn Stock Fund return = 22%
- Market portfolio return = 15%
- Tracking error = 6%

Substituting the values in the formula, we get:

Information ratio = (22% - 15%) / 6% = 1.17

Rounding off to two significant digits, we get the answer as 1.33, which is option A.

The Following Data Are Available Relating to the Performance of Long