The market return is 10.4% and the risk-free rate is 3.2%. 0.684 is the Portfolio's Sharpe ratio.
Sharpe ratio = RX-RE/Std Dev Rx
Rx = Expected portfolio return: 11:55 %.
RF: Risk-free rate of return: 3:2%.
Std Dev Rx= Standard deviation of portfolio return= 12.2%.
Sharpe ratio= 11.55-3.2/12.2 = 8.35/12.2 = 0.68442622950
So, Sharpe ratio = 0.684
The "excess return" on an asset or a portfolio over a specific time period is used to compute the Sharpe Ratio. The standard deviation of the portfolio, a gauge of its volatility, is divided by this sum.
The Sharpe ratio in finance evaluates an investment's performance in comparison to a risk-free asset after taking into account its risk.
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