header bg

Question:

An analyst collects the following information about an investment’s returns over the last 24 months:
Mean return = 18%
Standard deviation of returns = 12%
Given a risk‐free rate of 5%, the Sharpe ratio for this investment is closest to:

A 1.083.
Explaination

Sharpe ratio = (0.18 − 0.05) / 0.12 = 1.083