### CFA Practice Question

There are 410 practice questions for this study session.

### 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?

A. 2.15
B. 3.15
C. 4.34

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

User Comment
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*%*