Question

In: Statistics and Probability

he following table gives data for Vanguard Energy Fund and the Vanguard Health Care Fund from...

he following table gives data for Vanguard Energy Fund and the Vanguard Health Care Fund from 2012 through 2016.

Year Energy (%) Health Care (%)
2012 44.6 15.41
2013 19.68 10.87
2014 37 10.43
2015 -42.87 -18.45
2016 28.36 20.96

If the risk-free rate is 3%, using mean-variance analysis, which fund performed better, and why?

a.

The Health Care Fund performed better, because its Sharpe Ratio was lower.
b.

The Health Care Fund performed better, because its Sharpe Ratio was higher.
c.

The Energy Fund performed better, because its Sharpe Ratio was higher.
d.

The Energy Fund performed better, because its Sharpe Ratio was lower.

Solutions

Expert Solution

ANSWER::

c.

The Energy Fund performed better, because its Sharpe Ratio was higher.

Option:: (c) is correct............

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orchestra answered 2 years ago
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