Question: I have a risky asset that can generate 25% return in case of the good condition, 10% in case of normal condition, and -5% in

I have a risky asset that can generate 25% return in case of the good condition, 10% in case of normal condition, and -5% in case of the bad condition. Assuming the risk free rate is 3%, what would be the Sharpe ratio of the risky asset?

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To calculate the Sharpe ratio of the risky asset we need to use the formula Sharpe ratio Expected return of the risky asset Riskfree rate Standard dev... View full answer

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