In the Treynor ratio formula, (Rp-Rf) / beta, i observe that CFA answer, sometimes they use ratio, sometimes percentage in the return value.
For example, in CFA mock test answer:
asset return 15%. Rf 4%, beta 1.35, so (15 - 4) / 1.35 = 8.15
shouldn’t we use percentage , such as (0.15-0.04) /1.35 = 0.0815
which one is the correct one?
the calculation is used to compare the relative returns of different portfolios. Doesn’t matter which you use.
I’d be inclined to go with the latter, but it really shouldn’t matter. Just look at the answer choices. Either your answer will be in the correct range, or it will be too small by a factor of 100, or to large by a factor of 100.
if you compare Treynor ratio to slope of SML, it matters which one you use.
It matters only that they’re consistent, not which one you use.
Which is what I wrote earlier.