Financial Risk Manager Part 2

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Explanation:

The correct answer is A.

\text{Sharpe Ratio} = \frac{(R_p - R_f)}{\sigma} = \frac{(10 - 3)}{5} = \frac{7}{5} = 1.4

\text{Information Ratio} = \frac{(R_p - R_b)}{(\text{Tracking error})} = \frac{(10 - 8)}{10} = \frac{2}{10} = 0.2

Explanation:

The correct answer is A.

\text{Sharpe Ratio} = \frac{(R_p - R_f)}{\sigma} = \frac{(10 - 3)}{5} = \frac{7}{5} = 1.4

\text{Information Ratio} = \frac{(R_p - R_b)}{(\text{Tracking error})} = \frac{(10 - 8)}{10} = \frac{2}{10} = 0.2

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Portfolio return	10%
Beta	1.2
Standard deviation of the portfolio	5%
Benchmark return	8%
Tracking error	10%
Risk-free rate	3%

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Last updated: July 5, 2026 at 07:07

Sharpe ratio: 1.4; Information ratio: 0.2

Sharpe ratio: 1.4; Information ratio: 0.7

Sharpe ratio: 0.4; Information ratio: 0.2

Sharpe ratio: 0.4; Information ratio: 0.7