Instruction 17-5
A stock portfolio has the following returns under the market conditions listed below.
$$\begin{array} { l l l }
\text { Market Condition } & \text { Probability } & \text { Return } \
\text { Bull } & 0.4 & \$ 200 \
\text { Stable } & 0.3 & \$ 100 \
\text { Bear } & 0.3 & \$ 100
\end{array}$$
-Referring to Instruction 17-5,what is the return to risk ratio (RTRR)?
A) 2.00
B) 0.64
C) 1.08
D) 1.18

Question

Instruction 17-5
A stock portfolio has the following returns under the market conditions listed below.
 $$\begin{array} { l l l } 
\text { Market Condition } & \text { Probability } & \text { Return } \
\text { Bull } & 0.4 & \$ 200 \
\text { Stable } & 0.3 & \$ 100 \
\text { Bear } & 0.3 & \$ 100
\end{array}$$
-Referring to Instruction 17-5,what is the return to risk ratio (RTRR)?
A) 2.00
B) 0.64
C) 1.08
D) 1.18

Quizplus · Accepted Answer

To find RTRR, we need to divide the average return by the standard deviation of returns. The average return is (10%+7%+8%)/3 = 8.33%. The standard deviation is calculated using the formula: 
SQRT(((10%-8.33%)^2 + (7%-8.33%)^2 + (8%-8.33%)^2)/2). 
This gives us a standard deviation of 1.946%. 
RTRR = 8.33%/1.946% = 0.64. 
So the answer is B.

Instruction 17-5 a Stock Portfolio Has the Following Returns Under

Instruction 17-5
a Stock Portfolio Has the Following Returns Under