Greatest increase in portfolio sharpe ratio


A portfolio's expected return is 12 %, its standard deviation is 20%, and the risk-free rate is 4%. Which one of the following would make for the greatest increase in the portfolio's Sharpe ratio?

a. An increase of 1% in expected return

b. A decrease of 1% in the risk-free rate

c. a decrease of 1% in its standard deviation

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Finance Basics: Greatest increase in portfolio sharpe ratio
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