Given 3.2% monthly return of a stock, 0.2% monthly risk free rate, and beta of 1.5, calculate the Treynor ratio1 point0.010.020.03
Question
Solution 1
To calculate the Treynor ratio, we need to follow these steps:
Step 1: Calculate the excess return of the stock. The excess return is the difference between the monthly return of the stock and the risk-free rate. Excess return = Monthly return of the stock - Risk-free rate
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