Which of the following represents the best Sharpe ratio for an investment decision?
A) -1.64
B) -0.99
C) 0
D) 0.98
E) 1.46

Question

Quizplus · Accepted Answer

The Sharpe ratio is a measure of risk-adjusted return, and a higher Sharpe ratio indicates a better risk-adjusted return. Option E has the highest Sharpe ratio of 1.46, indicating that it has the best risk-adjusted return among the given options. Options A and B have negative Sharpe ratios, which means that the returns are not sufficient for the amount of risk taken. Option C has a Sharpe ratio of 0, which indicates that the return is not enough to compensate for the risk taken. Option D has a Sharpe ratio of 0.98, which is decent, but not as good as option E. Therefore, option E is the best choice.

Which of the Following Represents the Best Sharpe Ratio for an Investment