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  3. the following table shows the annual returns (in p

The following table shows the annual returns (in percent) and summary measures for a sample of...

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Basic Math

The following table shows the annual returns (in percent) andsummary measures for a sample of returns from the Vanguard EnergyFund and the Vanguard Health Care Fund from 2012 through 2016.

YearEnergy (%)Health Care (%)
201244.615.41
201319.6810.87
20143710.43
2015-42.87-18.45
201628.3620.96

If the risk-free rate is 3%, using mean-variance analysis, whichfund performed better, and why?

a.

The Energy Fund performed better, because its Sharpe Ratio washigher.

b.

The Health Care Fund performed better, because its Sharpe Ratiowas lower.

c.

The Energy Fund performed better, because its Sharpe Ratio waslower.

d.

The Health Care Fund performed better, because its Sharpe Ratiowas higher.

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