Given 3.2% monthly return of a stock, 0.2% monthly risk free rate, and beta of 1.5, calculate the Treynor ratio1 point0.010.020.033.Question 3Covariance of sto
Question
Given 3.2% monthly return of a stock, 0.2% monthly risk free rate, and beta of 1.5, calculate the Treynor ratio1 point0.010.020.033.Question 3Covariance of sto
Solution
It seems like your question got cut off. However, I can help you calculate the Treynor ratio with the information provided.
The Treynor ratio is calculated as follows:
Treynor Ratio = (Average Return of Portfolio - Risk-Free Rate) / Beta of the Portfolio
Given: Average Return of Portfolio = 3.2% or 0.032 Risk-Free Rate = 0.2% or 0.002 Beta of the Portfolio = 1.5
Substituting these values into the formula:
Treynor Ratio = (0.032 - 0.002) / 1.5 = 0.02 or 2%
So, the Treynor ratio is 0.02 or 2%.
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