Q.

What is sharp ratio in mutual fund actually mean.Suppose fund A's sharp ratio is 1.8 whether B's sharp ratio is 1.2.how one can conclude with this example?

Asked by sabyasachi mandal,
19 Mar '08 05:21 pm

Earn 10 points for answering

Answers (1)

1.

Sharpe Ratio

The Sharpe Ratio is a measure of the risk-adjusted return of an investment.

It was derived by Prof. William Sharpe, now at of Stanford University who

was one of three economist who received the Nobel Prize in Economics in

1990 for their contributions to what is now called "Modern Portfolio

Theory". Prof. Sharpe's web site at http://www-sharpe.stanford.edu/ has

several papers on this topic.

The calculation is pretty straightforward. You invest money in some

investment. You then calculate the value of your investment account

(including the initial investment plus the profit/loss) periodically, say

for example, every month. You then calculate the percentage return in each

month. It doesn't matter what kind of investment. It could be simply buying

and holding a single stock, or trading several different commodities with

several different trading systems. All that matters is the account value at

the end of each month.

Then calculate the averag ...more

Answered by Jinesh Mukesh Karia, 19 Mar '08 05:36 pm
The Sharpe Ratio is a measure of the risk-adjusted return of an investment.

It was derived by Prof. William Sharpe, now at of Stanford University who

was one of three economist who received the Nobel Prize in Economics in

1990 for their contributions to what is now called "Modern Portfolio

Theory". Prof. Sharpe's web site at http://www-sharpe.stanford.edu/ has

several papers on this topic.

The calculation is pretty straightforward. You invest money in some

investment. You then calculate the value of your investment account

(including the initial investment plus the profit/loss) periodically, say

for example, every month. You then calculate the percentage return in each

month. It doesn't matter what kind of investment. It could be simply buying

and holding a single stock, or trading several different commodities with

several different trading systems. All that matters is the account value at

the end of each month.

Then calculate the averag ...more

Report abuse

Useful

(0)

Not Useful

(0)

Your vote on this answer has already been received