Answer: 1.03

The Sharpe ratio is calculated as the portfolio's risk premium (return minus the risk-free rate) divided by its standard deviation. Here, the calculation is (15.2% - 3.1%) / 11.7% = 12.1% / 11.7% ≈ 1.03. Option B is incorrect because it uses the portfolio's return directly without subtracting the risk-free rate, resulting in 15.2% / 11.7% ≈ 1.30. Option C is incorrect because it adds the risk-free rate to the portfolio's return instead of subtracting it, yielding (15.2% + 3.1%) / 11.7% ≈ 1.56.

Author: LeetQuiz Editorial Team