Refer to the performance data for three mutual funds and the market portfolio in the following table.Which is the best investment based on its excess return per unit of systematic risk?

A) AGF
B) AIM
C) Alta
D) Market
E) Risk-Free

Question

Refer to the performance data for three mutual funds and the market portfolio in the following table.Which is the best investment based on its excess return per unit of systematic risk?

A) AGF 
B) AIM 
C) Alta 
D) Market 
E) Risk-Free

Quizplus · Accepted Answer

The Treynor index measures the excess return per unit of systematic risk.
Treynor Index = 11ea7fdb_fc0c_2096_a768_afc2e697f9b7_TB2902_11 Treynor Index for AGF = 11ea7fdb_fc0c_2097_a768_2783cda16379_TB2902_11 = 0.085 or 8.5%
The market has the highest Treynor index, so it is the best investment.

Refer to the Performance Data for Three Mutual Funds and the Market