The expected return on the market is 12% with a standard deviation of 20%.The risk-free rate is 4.5%.What is the Sharpe ratio of a portfolio with an expected return of 10.5% and a standard deviation of 12%?
A)0.38
B)0.50
C)0.70
D)0.88

Question

Quizplus · Accepted Answer

The Sharpe ratio is calculated as (Rp - Rf) / σp, where Rp is the expected portfolio return, Rf is the risk-free rate, and σp is the standard deviation of the portfolio's excess return. Plugging in the given values: (10.5% - 4.5%) / 12% = 0.50.

The Expected Return on the Market Is 12% with a Standard