Explain the purpose of the sharpe ratio

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Explain the purpose of the Sharpe Ratio and how you interpret its outcome. Include the Sharpe Ratio formula, define each of its components, and provide a numerical example. Finally, write down a brief "script" of how you would interpret the outcome of your example to a client.Q7. In 2019, the annualized t-bill rate was 3%. The 1-year return for Mutual Fund A was 19% with a standard deviation of 11, while the 1-year return for Mutual Fund B was 14%, with a standard deviation of 6. What portfolio performed better on an absolute basis, and on a risk adjusted basis?

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Reference no: EM133118781

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