If a portfolio had a return of 12%, the risk-free asset return was 4%, and the standard deviation of the portfolio's excess returns was 25%, the Sharpe measure would be
A) 0.12.
B) 0.04.
C) 0.32.
D) 0.16.
E) 0.25.

Question

Quizplus · Accepted Answer

The Sharpe ratio is calculated as (Portfolio Return - Risk-Free Rate) / Standard Deviation of Portfolio's Excess Returns. Using the given numbers: (0.12 - 0.04) / 0.25 = 0.08 / 0.25 = 0.32.

If a Portfolio Had a Return of 12%, the Risk-Free