Increasing the amount invested in i will ________ the Sharpe ratio of portfolio P if its expected return E[R_i] ________ the required return given portfolio P defined as in Formula (11.20) A) decrease; exceeds B) increase; exceeds C) increase; goes below D) none of the above

Question

Quizplus · Accepted Answer

According to the Sharpe ratio formula, increasing the amount invested in i would increase the expected return of the portfolio. If this expected return exceeds the required return given the portfolio, the Sharpe ratio would be positively impacted and increase. Therefore, choice B is the best selection.

Increasing the Amount Invested in I Will ________ the Sharpe