n NISM Certifications
V-A NISM Series V-A
Medium

Return from a fund is 11.5% and the risk-free rate is 7%, the Standard deviation is 3 & Beta is 1.9. What will be the DENOMINATOR for calculating the Sharpe ratio?

Practice question from NISM Series V A - Mock Test 6 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    4.5

  2. 3

    Correct answer

  3. C

    1.9

  4. D

    11.5

Why this is the answer

The Sharpe ratio formula is (Return - Risk-Free Rate) / Standard Deviation. The denominator is the Standard Deviation, which in this case is 3.

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