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Calculate the sharpe ratios for apple

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Reference no: EM133110275

An investor has two stocks in her portfolio: Apple and Banana. The weights are 30% for Apple and 70% for Banana. There are three possible economic states in the future, and the stock returns in these states are shown below. The risk-free rate is 1% and the expected market return is 8%. Please calculate the Sharpe ratios for Apple, Banana and the portfolio.  

 

Probability

Apple

Banana

State 1

0.25

12%

20%

State 2

0.5

7%

5%

State 3

0.25

1%

-10%

Reference no: EM133110275

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