Question: A financial analyst forecasts the return on the LuSE All share index portfolio over the coming year will be 10 %. The one year T-bill

A financial analyst forecasts the return on the LuSE All share index portfolio over the coming year will be 10 %. The one year T-bill rate is 5 %recent returns of the Index suggest a standard deviation of returns to be 18 %.

What does this information suggest about the degree of risk aversion of the average investor assuming the average portfolio resembles the LuSE All share index? (5 marks)

What is the Sharpe measure of the portfolio above?

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