Zilo stock has an average return minus the average risk-free rate of 5 percent, a beta of 1, and a standard deviation of returns of 20 percent. The Sharpe index of Zilo stock is
A)0.05.
B)0.35.
C)0.25.
D)0.45.
E)None of these are correct.

Question

Quizplus · Accepted Answer

The Sharpe index is calculated as (Average return - Risk-free rate) / Standard deviation. Here, it is 0.05 / 0.20 = 0.25.

Zilo Stock Has an Average Return Minus the Average Risk-Free