Which one of the following is the portfolio that maximizes the Sharpe ratio?

Question

Quizplus · Accepted Answer

The minimum-variance-efficient frontier represents the set of portfolios that achieve the minimum variance for each level of expected return. The Sharpe ratio measures the excess return earned above the risk-free rate per unit of risk taken, and a higher Sharpe ratio indicates a more efficient portfolio. Therefore, the portfolio that lies on the minimum-variance-efficient frontier maximizes the Sharpe ratio as it achieves the highest expected return for a given level of risk.

Which One of the Following Is the Portfolio That Maximizes