Which of the following is a drawback of using Sharp ratio?

It ignores correlation

It subtracts risk free rate

It cannot be applied to well-diversified portfolios

. It incorrectly measures risk

Suppose you investigate the performance of two mutual funds. Mutual fund A has returned 12% in the last year with 1.2 Sharp ratio. The second Mutual Fund B, was much more successful in that it returned 24% in the last year with a Sharpe ratio of 0.9. What is your best course of action and its justification?

Select fund B because its twice as good as A

Select fund A because it is probably less risky than fund B as judged by higher Sharpe Ratio

Select fund B because it delivers higher returns than fund A

Select fund A because it has higher risk-adjusted return.