A portfolio with a 30% standard deviation generated a return of 15% last year when T-bills were paying 6.0%. This portfolio had a Sharpe ratio of ____.

Question

asked Dec 13, 2021 27.2k views

1 Answer

Giulio · Answer 1 · 2021-12-17T18:37:44+0000

Answer: 0.3

Step-by-step explanation:

The Sharpe ratio is simply used by organizations and investors in order to compare the return on an investment to its risk.

From the question, we are informed that a portfolio has a 30% standard deviation generated a return of 15% last year when T-bills were paying 6.0%.

The Sharpe ratio will be:

= (15% - 6.0%)/30%

= 9%/30%

= 0.09/0.3

= 0.3