Aportfolio with a 25% standard deviation generated a return of 15% last year when t-bills were paying 4.5%. this portfolio had a sharpe ratio (e(r_p) - r_l/sigma_p) of __

a. 0 65
b. 0.50
c. 0.42
d. 0.35

c. 0.42

Explanation:

The formula and the computation of the sharpe ratio is shown below:

= (Generated yearly return - T-bill) ÷ (standard deviation )

= (0.15 - 0.045) ÷ (0.25)

= (0.105) ÷ (0.25)

= 0.42

We simply deduct the T-bill from the yearly return generated and then divided it by the standard deviation so that the ratio can be achieved

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