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Answer: 0.139
**Explanation:** The Information Ratio (IR) is calculated as: \[ IR = \frac{\text{Portfolio Return} - \text{Benchmark Return}}{\text{Tracking Error}} \] Given: - Portfolio Return = 13.2% - Benchmark Return = 12.3% - Tracking Error = 6.5% \[ IR = \frac{13.2\% - 12.3\%}{6.5\%} = \frac{0.9\%}{6.5\%} = 0.13846 \approx 0.139 \] Therefore, the correct answer is **0.139** (Option C).
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A portfolio has an average return over the last year of 13.2%. Its benchmark has provided an average return over the same period of 12.3%. The portfolio's standard deviation is 15.3%, its beta is 1.15, its tracking error volatility is 6.5% and its semi-standard deviation is 9.4%. Lastly, the risk-free rate is 4.5%. Calculate the portfolio's information Ratio (IR).
A
0.569
B
0.076
C
0.139
D
0.096
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