Question

A portfolio with a 21% standard deviation generated a return of 16% last year when T-bills were paying 5.5%. This portfolio had a Sharpe ratio of ____.

Answer 1

0.5

Step-by-step explanation:

A portfolio has 21% standard deviation

The return is 16%

T-bills were paying 5.5%

Therefore the Sharpe ratio can be calculated as follows

= 16-5.5/21

= 10.5/21

= 0.5

Hence the Sharpe ratio is 0.5