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A risky fund has an expected return of 17% and standard deviation of 25%. The risk-free rate is 9%. The expected return of the optimal complete portfolio is 12%. The Sharpe ratio of the optimal complete
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A risky fund has an expected return of 17% and standard deviation of 25%. The risk-free rate is 9%. The expected return of the optimal complete portfolio is 12%. The Sharpe ratio of the optimal complete portfolio is:

User Jimoc
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1 Answer

23 votes
23 votes

Answer:

the Sharpe ratio of the optimal complete portfolio is 0.32

Step-by-step explanation:

The computation of the sharpe ratio is shown below:

= (Return of portfolio - risk free asset) ÷ Standard deviation

= (17% - 9%) ÷ 25%

= 8% ÷ 25%

= 0.32

Hence, the Sharpe ratio of the optimal complete portfolio is 0.32

We simply applied the above formula

User Dominican
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