An investor wants to evaluate funds 1, 2, and 3 and the index. The risk-free rate is 3%. Using Sharpe, which has the highest Sharpe ratio?

Group of answer choices

Fund 1

Fund 2

Fund 3

Index

Beta Average Return 10% 18% 22% 16% Fund 1 Fund 2 Fund 3 Index Standard Deviation 12% 20% 28% 17% 0.7 1.0 1.7 1.0