FIN 102 - Exhibit 19 Risk Adjusted Return

Risk Adjusted Return

Instructions:
Name: 1 Type your name in cell B4.
Section: 2 Type your section in cell B5.
3 Save the document with your name: Exhibit 19 - Risk Adjusted Return-[Last Name First Name].
4 You are expected to fill out all yellow cells (if your answer is 0, then put 0).
5 The data required is found below in the notes section.
6 All numerical values are listed in US Currency.
7 Read and follow the Notes and Assignment Instructions below:
*This assignment works best on Windows 11 and MS Excel for Windows desktop app. If you use any
8 other version or use on a Mac, your calculations may not appear. Send the file to instructor if there
are issues.

Notes and Assignment Instructions:

A risk-adjusted return is a calculation of the profit or potential profit from an investment that takes
1 into account the degree of risk that must be accepted in order to achieve it. The risk is measured in
comparison to that of a virtually risk-free investment—usually U.S. Treasuries.*

The risk-adjusted return measures the profit your investment has made relative to the amount of risk
the investment has represented throughout a given period of time. If two or
2 more investments delivered the same return over a given time period, the one that has the lowest
risk will have a better risk-adjusted return.* There are many ways to compute Risk-adjusted Return,
but one of the most common meansures is called the Sharpe Ratio.

For example, say Mutual Fund A returned 12% over the past year and had a standard deviation of
10%, Mutual Fund B returns 10% and had a standard deviation of 7%, and the risk-free rate over the
time period was 3%. The Sharpe ratios would be calculated as follows:

3
Mutual Fund A: (12% - 3%) / 10% = 0.9
Mutual Fund B: (10% - 3%)/ 7% = 1

Even though Mutual Fund A had a higher return, Mutual Fund B had a higher risk-adjusted return,
meaning that it gained more per unit of total risk than Mutual Fund A.*

4 Your instructor will give you the Risk Free Rate date that you will use.
a. IF YOUR INSTRUCTOR GIVES YOU THE RISK FREE RATE, USE THAT, OTHERWISE GO TO "4b."
b. Click on the "E19-RAR" tab and then find the Risk Free Rate by clicking on the link.
c. Enter the Risk Free Rate in cell J7 on the "E19-RAR" worksheet.
5 Click on the "E19-Data" tab and carefully follow the instructions listed.
*Source: www.investopedia.com
FIN 102 - Exhibit 19 Risk Adjusted Return
Risk Adjusted Return
Data Results
Start Date Return
End Date Return 0.000%
Risk Free Rate 0.000% ► Enter the Risk Free Rate (10 Yr Treasury Return) - Click Link
Standard Deviation ^TNX 1.21 0.029 2.4555% : Treasury Yield 10 Years - Yahoo Finance

Risk Adjusted Return Example of the Risk Free Rate or Treasury Yield ê
Rank Date Cash Cash Interest Net Worth % Return N

7
 Notes and Assignment Instructions

The data from your portfolio in the MarketWatch Game will be used
to calculate the Risk Adjusted Return. Follow the steps below to
ensure that the spreadsheet works correctly.

Use the following link to go to the MarketWatch game site:

https://www.marketwatch.com/game

Find the game that you have participated in during the FIN 102 class
and make sure that you are on the "Portfolio Tab."

Scroll down on the page to the "Portfolio Performance" group and

click on the "Download" link in the upper right hand corner. This
should open up the .csv file into Microsoft Excel.

Press Ctrl-A and all of the data will be selected. Press Ctrl-C to copy
the data.

Return back to this spreadsheet and place your cursor into Cell A1
(the yellow highlighted cell on this sheet). Press Ctrl-V to paste the
data into this worksheet.

You can now look at the calculated information on the E19-RAR tab,
and find out the Risk Adjusted Return (this is assuming that you
followed the previous step(s) earlier to find out the Risk Free Rate.
 FIN 102 - Exhibit 19 Risk Adjusted Return
Risk Adjusted Return
Data Calculations (from E19-Data)
Important Note
Count
This worksheet should not be
altered or modified in any way. Row
These calculations are necessary Start Date Return
for the spreadsheet to function End Date Return
properly.
Standard Deviation
sted Return

s (from E19-Data)

#NAME?
#NAME?

0.000%