Question
Find the average monthly risk premium earned by each of the four stocks over this period of time and the Sharpe Ratio for each of
Find the average monthly risk premium earned by each of the four stocks over this period of time and the Sharpe Ratio for each of the four stocks? (Hint: A risk premium is defined as return of an investment in excess of risk-free rate and Sharpe ratio is defined as risk premium of an investment divided by the standard deviation of the investment. It is well-known that T-bill can be considered a proxy for risk-free investment. You have calculated average monthly return for each stock and that for the T-bill investment. So, you have all the information required for the calculation of average monthly risk premium for each of the four stocks.)
I have a covariance matrix and a correlation matrix in an excel document with all the data but I need help finding the above question.
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