Consider the risk-free rate over your investment period was 6%, and the market's average return was 14%

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Consider the risk-free rate over your investment period was 6%, and the market's average return was 14% with a standard deviation of 20%. What was your Sharpe ratio?

What if you leverage your position? For example, what if you borrow USD 1,000 and invest USD 2,000 (USD 1,000 which you borrowed and USD 1,000 of your own money) in the market, what is your Sharpe ratio for this leveraged position?

Explain (or proof) how the Sharpe ratio changes if you leverage up your position.

Posted Date: May 19, 2024 10:09 PM

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Consider the risk-free rate over your investment period was 6%, and the market's average return was 14%

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