Ashford FIN680 Corporate Finance - Confirm or correct their Sharpe

Question # 00648321
Due on: 08/07/2023
Posted On: 08/07/2023 12:45 AM
Tutorials: 1
Rating:
4.9/5
Question

FIN 680 Ashford University Corporate Finance Discussion

• Confirm or correct their Sharpe and Treynor ratio calculations.
• Use the R2 to explain which fund is more diversified and how that impacts each ratio.
• Explain why the two ratios are not the same for the two chosen portfolios.

Classmate 1

Sharpe ratio

shows the risk adjusted performance of the fund Using the total risk or standard deviation as the denominator.

= (Rp-Rf)/Standard deviation of portfolio

Treynor ratio

Treynor ratio shows the risk adjusted performance of the fund Using the beta or systematic risk as the denominator

= (Rp-Rf)/Beta of asset

Portfolio E

Sharpe ratio = (15%-6%)/17.4% = 0.51

Treynor ratio = (15%-6%)/0.88 =0.1

Portfolio F

Sharpe ratio = (19%-6%)/18% = 0.72

Treynor ratio = (19%-6%)/0.89 =0.15

Using the sharpe ratio and total risk portfolio F perfomed best

Using the Treynor ratio and total risk portfolio F perfomed best

Overall portfolio F had the best performance

An investor should use the Sharpe ratio when he is more concerned with the total risk of the portfolio.

An investor should use the Treynor ratio when he is more concerned with the systematic risk of the portfolio.

Sharpe ratio measures the performance of an investment compared to a risk-free asset, after adjusting for its risk. This is calculated by dividing the difference between the portfolio return and risk free rate by the standard deviation of portfolio returns.

Treynor ratio measures the returns earned by an investment in excess of that which could have been earned on an investment that has no diversifiable risk, per unit of market risk assumed. This is calculated by dividing the difference between the portfolio return and risk free rate by the portfolio beta.

Portfolio F since it has higher Sharpe and Treynor ratios.

Sharpe ratio is best used when the portfolio is not well diversified while Treynor ratio is best used when the portfolio is well diversified.

Posted By :
Questions: 12514 Tutorials: 12511
Tutorials for this Question

Ashford FIN680 Corporate Finance - Confirm or correct their Sharpe

Tutorial # 00647203
Posted On: 08/07/2023 12:47 AM
Feedback Score: Not rated yet!
Purchased By: 2
Posted By:
Questions:
12514
Tutorials:
12511
Tutorial Preview
The solution of Ashford FIN680 Corporate Finance - Confirm or correct their Sharpe...
Attachments
Ashford_FIN680_Corporate_Finance_-_Confirm_or_correct_their_Sharpe.ZIP (18.96 KB)

Great! We have found the solution of this question!

Related Questions
UOP FIN571 Business Why Funding Is Needed for A Company
Determine why funding is needed for the company. Determine the sources of funding. Consider self-funding, borrowing, equity, venture capital, etc. Evaluate the requirements of each funding sour …
FIN5200 Statement Isnt a Cash Flow Good Representation
FIN 5200 AU Statement Isnt a Cash Flow Good Representation Questions Chapter 1&2.  Textbook: Title: Corporate Finance  QUESTIONS  #1 Define liquidity and explain what …
FIN5200 Corporate Finance - A capital intensity ratio of 1.03 means
FIN 5200 AU Corporate Finance Exam Practice Title: Corporate Finance #1 A capital intensity ratio of 1.03 means a firm has \$1.03 in: a. sales for every \$1 in total assets. b. total assets …
FIN571 Investor Convert His Bond Into Shares Worksheet
FIN 571 Saudi Electronic University Investor Convert His Bond Into Shares Worksheet Q1: An investor owns a bond selling for \$5,000. This bond can be converted into 50 shares of stock that are …
Grantham FIN307 Final Exam Latest 2023
Grantham Fin307 Final Exam  Principles of Finance – Week 8 Final Exam You will have a mixture of problems and essays. For the essays, you should have at least five paragraphs fo …
Rasmussen FIN6466 Trend analysis of JC Penney
RC Trend analysis of JC Penney Questions FIN6466CBE Section 01CBE Financial Analysis and Decision-Making (11 Weeks) - CBE Online Course - 2023 Spring Quarter Deliverable 5 - Trend Analysis Prese …
Ashford FIN679 Advanced Corporate Finance Essay
FIN 679 Ashford University Advanced Corporate Finance Essay Prior to beginning work on this assignment, carefully review the Company Profile and Due Diligence Guidelines (attached). You will suppor …
FIN 679 UArizona Global Campus Advanced Corporate Finance Discussion Briefly discuss a minimum of three risk management techniques that could be used in a pre-merger risk assessment within the deve …
Ashford FIN679 Calculate the Merger Premium of The Target
FIN 679 AU Calculate the Merger Premium of The Target Company Analysis Complete an environment scan and Internet search to determine how investment bankers look at comparable acquisitions to determ …
Ashford FIN680 Corporate Finance - Confirm or correct their Sharpe
FIN 680 Ashford University Corporate Finance Discussion In your response to your classmates, Confirm or correct their Sharpe and Treynor ratio calculations. Use the R2 to explain …
Recent Questions
Personality Traits Discussion - What do you think of this model
Personality Traits Discussion Big 5 Personality (6) https://pages.uoregon.edu/sanjay/bigfive.html 1.What do you think of this model? Do you agree with it? What aspects of personality do you …
Personal Life Manifesto Paper - what type of future you would like
University of California Riverside Personal Life Manifesto Paper  Think and write about what type of future you would like to avoid. What would your life be like if you failed to pursue specif …
Discuss the Roles of Big Data Analytics in Financial
Discuss the Roles of Big Data Analytics in Financial Institutions Using various articles, discuss the roles of Big Data Analytics in Financial Institutions. Clues Financial institutions inclu …
ITS3105 Checking for Winners and Managing the Game
ITS3105 Checking for Winners and Managing the Game Checking for Winners and Managing the Game All code is correct but there are two methods below in red where you need to do the logic for the ga …
Programming Essentials Paper - You are the nutritional coach for a local high
University of the District of Columbia Programming Essentials Paper You are the nutritional coach for a local high school football team. You realize that some of the players are not up to par havin …
Grammar Restrictions for Recursive Descent Parsers Research
WSDF Grammar Restrictions for Recursive Descent Parsers Research Paper There are two restrictions on the type of grammars that can be used with a recursive descent parser. The first is that the gra …
Python Program Project - A local small business has hired
UDC Python Program Project A local small business has hired you to write a payroll calculation program. The program only needs to calculate gross pay for an employee and display the results. Your p …
Visual Basic Programming Language Reflection
Visual Basic Programming Language Reflection Paper Why should you learn Visual Basic Programming Language? Compare Visual Basic to another programming language and give me 5 reasons you should lear …
Childhood respiratory tract infections Case Study
Childhood respiratory tract infections Case Study Questions Case Study Respiratory Tract Infections, Neoplasms, and Childhood Disorders Patricia was called at work by a woman at the local d …
Patient Education, Illiteracy and Effective Communication in Healthcare
Patient Education, Illiteracy and Effective Communication in Healthcare Explain multicultural communication and its origins. Compare and contrast culture, ethnicity, and acculturation. Expla …