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2 February, 07:46

An investor ponders various allocations to the optimal risky portfolio and risk-free T-bills to construct his/her complete portfolio. How would the Sharpe ration of the complete portfolio be affected by this choice?

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  1. 2 February, 11:15
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    The expected return of the portfolio will be impacted.

    Explanation:

    For financial, after modification of the risk, the Sharpe ratio calculates investments ' success relative to a risk free asset. The disparity between investment returns and risk-free returns is specified, divided between the regular investment deviations.

    If the asset distribution has shifted, the projected return on the portfolio would be affected. Since the estimated portfolio gain is the first element in the Sharpe ratio numerator, this ratio is modified.
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