Calculating Sharpe Ratio for Performance Evaluation

John is a portfolio manager who manages a mutual fund that has returned 10% over the past year. He is interested in understanding how well his fund performed relative to the risk taken. The fund's standard deviation is 15%, and the risk-free rate during the same period is 2%.

Please calculate the Sharpe Ratio for John’s mutual fund and discuss what this ratio indicates regarding the fund’s risk-adjusted performance.