Question
In: Finance
Sharpe ratio of portfolio A and B are 0.40 and 0.52 respectively. Therefore, CAL(A) is _________...
Sharpe ratio of portfolio A and B are 0.40 and 0.52
respectively. Therefore, CAL(A) is _________ than CAL(B).
Select one:
a. Larger
b. Steeper
c. Smaller
d. Flatter
Solutions
Expert Solution
Answer-
The correct Option is d. Flatter
As the sharpe ratio is lower the Capital Allocation Line (CAL) is flatter. As Sharpe ratio is higher the more steeper the CAL. As sharpe ratio of A (0.40) is lower than B ( 0.52) therefore it has flatter CAL.
The other options a, b and c are incorrect.
jeff jeffy answered 3 years agoRelated Solutions
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