The standard deviation and returns for the funds over the


The standard deviation and returns for the funds over the past 10 years are listed here. Assuming a risk-free rate of 4 percent, calculate the Sharpe ratio for each of these. In broad terms, what do you suppose the Sharpe ratio is intended to measure?

                                                                                           10-Year Annual Return                 Standard Deviation

Arias S&P 500 Index Fund                                                            9.15%                                          19.35%

Arias Small-Cap Fund                                                                   14.05                                             26.82

Arias Large-Company Stock Fund                                                 9.53                                              23.82

Arias Bond Fund                                                                            8.73                                              11.45

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Financial Management: The standard deviation and returns for the funds over the
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