Answer-first summary for fast verification
Answer: 0.461
The Sharpe ratio is calculated as: $$ \text{Sharpe Ratio} = \frac{\text{Expected return of portfolio} - \text{Risk-free rate}}{\text{Volatility of returns of portfolio}} $$ Given: - Expected return of portfolio = 7.6% - Risk-free rate = 2.3% - Volatility of returns of portfolio = 11.5% $$ \text{Sharpe Ratio} = \frac{7.6\% - 2.3\%}{11.5\%} = \frac{5.3\%}{11.5\%} = 0.461 $$ The Sharpe ratio measures the excess return per unit of risk (volatility) and is a key metric for evaluating risk-adjusted performance.
Author: LeetQuiz .
Ultimate access to all questions.
No comments yet.
| Expected return of the portfolio | 7.6% |
|---|---|
| Volatility of returns of the portfolio | 11.5% |
| Expected return of the STI | 4.0% |
| Volatility of returns of the STI | 8.7% |
| Risk-free rate of return | 2.3% |
| Beta of portfolio relative to STI | 1.7% |
What is the Sharpe ratio of this portfolio?
A
0.036
B
0.047
C
0.389
D
0.461