alleryStart learning →A portfolio returns 12% with standard deviation 10% while the risk-free rate is 5%. What is its Sharpe ratio?
A1.20
B0.50
C0.17
D0.70
Answer & Solution
Correct answer: D. 0.70
Excess return is 12 minus 5 equals 7, and 7 divided by 10 gives 0.70.
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