CFA Practice Question

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CFA Practice Question

Assume the risk-free rate is 4%. The expected return on the market portfolio is 15%, and its standard deviation is 20%. A company has an expected return of 25%, a standard deviation of 40% and a correlation of 0.8 with the market. What is the company's Sharpe ratio?
Correct Answer: 0.525

(25% - 4%) / 40% = 0.525

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