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

The return from a mutual fund scheme is 8.3%, and the Standard Deviation is 0.6. The risk-free rate of return is 5%. Calculate the Sharpe ratio.

Practice question from NISM Series V A - Short Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    3.5

  2. 5.5

    Correct answer

  3. C

    4

  4. D

    2.87

Why this is the answer

The Sharpe ratio formula is: (Return Earned - Risk free Return) / Standard Deviation \[ \frac{8.3 - 5}{0.6} = \frac{3.3}{0.6} = 5.5 \]

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