Question

16) Assume that last year, T-bills and the market yielded 2% and 10% respectively. Bill earned 10% on a portfolio with a beta of 0.9, while Mary earned 12% on a portfolio with a beta of 1.5. Their respective Treynor scores were.

*A) 8.89 and 6.67 B) 9 and 10.5 C) 9.1 and 12 D) 8.7 and 12.1.

Please show steps solving it using The financial calculator (Model: HP10BII).

Answer 1

	Treynor ratio = (Return- risk free return)/Beta
Put in calculator following the steps
Steps		Bill	Mary
i	return	10%	12%
ii	risk free return	2%	2%
iii=i-ii	return - risk free return	8%	10%
iv	Beta	0.9	1.5
v=iii/iv	Treynor ratio	8.89%	6.67%
	therefore answer = A) 8.89 and 6.67