- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 38. Analysis of Active Portfolio Management
- Subject 2. Comparing Risk and Return

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**CFA Practice Question**

The mean return in 2011 for a stock mutual fund of midsize companies was 5.3% and the mean return for a risk-free bond was 1.0%. If the Sharpe measure for the mutual fund is 2, what is the standard deviation of the stock mutual fund?

B. 3.15

C. 4.34

A. 2.15

B. 3.15

C. 4.34

Correct Answer: A

Sharpe measure = (portfolio mean return - risk-free mean return)/ standard deviation of the portfolio

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**User Contributed Comments**
5

User |
Comment |
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TammTamm |
When in doubt, plug each answer into the formula until you get the correct answer. Example 5.3-1/X=2 A. 5.3-1/2.15=2 B. 5.3-1/3.15=1.365 C. 5.3-1/4.34=.9907 D. 5.3-1/6.37=.675 The answer is A. Just a note to help. |

Meka76 |
It would also be good to know how to convert any formula: Sharpe Ratio=(Rp-Rf)/portfolio standard deviation Portfolio standard deviation = (Rp-Rf)/Sharpe ratio |

RCapistrano |
Set up the equation and solve for the unknown "x". 5.3-1/X=2 x = 4.3/2 x = 2.15 |

2014 |
after u minus return - risk u look at possible answers givn in question and just select |

davidt87 |
2.15*%* |