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information to evaluate Fund J use using the relevant Sharpes S. By= 1.2 53= 32% RJ = 150 om = 20% RM = 10% RFR = 3%
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Answer #1

Sharpe ratio of a fund is the return earned in excess of the risk-free rate per unit of volatility or total risk.

Total Return of Fund J = 15%

Risk-free rate = 3%

Standard deviation of Fund J = 32%

Hence, Sharpe Ratio = (15% - 3%) / 32% = 0.375

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