You are asked to analyse the two portfolios having the following characteristics:
|
Portfolio |
Observed Return |
Beta |
Standard Deviation |
|
Alpha Gama |
0.18 0.15 |
1.2 1.5 |
0.04 0.02 |
The risk-free rate of return is 0.09 and the return on Market Portfolio is 0.14 with Standard Deviation is 0.5. Compute the appropriate measure of performance of these portfolios and comment on their respective performance. Use Sharpe’s Index and Treynor’s Index.
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