Give detailed explanations and process for both of the following questions, choose the correct
answers and show details:
Portfolio Kappa has an average return of 18% and standard deviation of returns (total) of 29%.
The idiosyncratic standard deviation of returns of Kappa is 22%, and the risk-free rate is 3%.
Calculate its Sharpe ratio to the nearest decimal.
Options:
-0.09 0.41 0.52 0.75 1.20
Then, using the correct answer you got from last question, calculate Famas measure for portfolio
Kappa (to the nearest decimal). The average return of the market portfolio is 15%, and the
standard deviation of the returns of the market portfolio is 17%.
Options:
-0.10 -0.05 0.05 0.13 0.26