ou manage an equity fund with an expected risk premium of 13% and a standard deviation of 44%. the rate on treasury bills is 6.6%. your client chooses to invest $90,000 of her portfolio in your equity fund and $60,000 in a t-bill money market fund. what is the reward-to-volatility (sharpe) ratio for the equity fund?

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tutorconsortium127 tutorconsortium127 · Answer 1 · 2022-10-29T07:11:21+02:00

The equities fund's reward-to-volatility (Sharpe) ratio is 0.2954.

According to the investment goal of the underlying mutual fund scheme, equity funds invest their assets in the stocks of various companies.

Due to their potential for long-term wealth generation, these funds make excellent investment choices for capital growth.

Equity funds come in many varieties, including those that focus on growth companies (which typically don't pay dividends), income funds (which hold firms that pay significant dividends), value stocks, large-cap stocks, mid-cap stocks, small-cap stocks, or mixes of these.

By collecting investor capital into a single fund and investing it into multiple enterprises, equity funds encourage investment.

Therefore,

Portfolio risk premium / Standard Deviation = Sharpe Ratio

13% / 44% = 0.2954

To learn more about equity fund, refer to:

https://brainly.com/question/22069020

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