Someone mentioned that you might also want to calculate the Sharpe ratio as a measure of stand-alone risk. Calculate the missing ratios and fill in the blanks on the row for the Sharpe ratio in the table. Briefly explain what the Sharpe ratio actually measures.

8-23 RISK AND RETURN Assume that you recently job as a financial planner with Merrill Finch inc alar u recently graduated with a major in finance. You just landed went is to invest $100,000 for a client. Because the funds Inc., a large financial services corporation. Your first ascun to be invested in a business at be invested in a business at the end of 1 year, you have been instructed to plan for plan for a 1-year holding period Further your boss has restricted to the investment alternatives in the following table shown with their probabilities and outcomes. (For now, disregard the items at the bottom of the data: you will fill in the blanks late ave been ins for a client Finch incy srodtiated town with their probabilities and associated Returns on Alternative Investments High Tech Collections 0.1 38.5 113 Estimated Rate of Return State of the Economy Probability U.S. Market Two-Stock T-Bills Rubber Portfolio Portfolio Recession 3.0% (29.5%) 24.5% 3.596 (19.5%) (2.5%) Below average 3.0 (9.5) 10.5 (16.5) (5.5) Average 12.5 (1.0) 0.5 7.5 5.8 Above average 275 (5.0) 22.5 Boom 0. 1 3 .0 42.5 (200) 35.5 1.296 8.0% 11.2 15.2 9.8 Sharpe ratio -0.16 0.54 -0.50 Note: "The estimated returns of U.S. Rubber do not always move in the same direction as the overall economy. For example, when the economy is below average, consumers purchase fewer tires than they would if the economy was stronger. However, if the economy is in a flat-out recession, a large number of consumers who were planning to purchase a new car may choose to wait and instead purchase new tires for the car they currently own. Under these circumstances, we would expect U.S. Rubber's stock price to be higher if there is a recession than if the economy is just below average. CV 1.9 0.88 Merrill Finch's economic forecasting staff has developed probability estimates for the state of the economy, and its security analysts developed a sophisticated computer program to estimate the rate of return on each alternative under each state of the economy. High Tech Inc. is an electronics firm, Collections Inc, collects past-due debts, and U.S. Rubber manufactures tires and various other rubber and plastics products. Merrill Finch also maintains a "market portfolio" that owns a market-weighted fraction of all publicly traded stocks; you can invest in that portfolio and thus obtain average stock market results. Given the situation described, answer the following questions