Respuesta :
The sharp ratio for the given question is 0.745.
How to calculate sharp ratio?
To evaluate risk-adjusted performance, the Sharpe ratio divide a portfolio's higher return by a measure of its volatility.
Investors typically substitute U.S. Treasury bond yields for the risk-free rate of return when calculating the Sharpe ratio by first deducting the risk-free rate from the rate of return on the portfolio. They then divide the outcome by the excess return on the portfolio's standard deviation.
Given,
Average return = 12.01%
Standard deviation = 13.3%
Risk-free rate = 2.1%
Now,
Calculating the sharp ratio,
Formula,
Sharp ratio = [(Average return - Risk-free rate) / Standard deviation]
Sharp ratio = [(12.01% -2.1%) / 13.3%]
Sharp ratio = [9.91% / 13.3%]
Sharp ratio= 0.745
Hence, The Sharp ratio is 0.745.
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