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. Probability of good condition is 20%, normal condition is 70% and bad condition is 10%. Standard deviation of the risky asst is 5% 1.7 3.1 1.3 5.1
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