CFA Level 3
Portfolio Management and Wealth Planning

Evaluating Risk-Adjusted Performance with Sharpe Ratio

Easy Performance Evaluation Risk-adjusted Performance

John is managing a portfolio that has generated a return of 12% over the past year. The portfolio has a standard deviation of returns of 8%, and the risk-free rate during the same period was 3%. John wants to assess the risk-adjusted performance of his portfolio. Which of the following metrics would be the best for evaluating the portfolio's performance in relation to its risk?

Hint

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