n NISM Certifications
X NISM Series X
Medium

Sharpe's ratio divides the portfolio's risk premium by the:

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Variance of return

  2. B

    Risk free rate

  3. Standard deviation of return

    Correct answer

  4. D

    Slope of the characteristic line

Why this is the answer

Sharpe Ratio = (Return – Risk-free rate) / Standard deviation.

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