You Are Provided Below with Annual Return, Standard Deviation of Returns

question 10

Essay

You are provided below with annual return, standard deviation of returns, and tracking error to the relevant benchmark for three portfolios. Calculate the Sharpe ratio and information ratio for the three portfolios and rank them according to each measure.
$$\begin{array} { l c c c } \text { Partfalia } & \text { Return } & \text { Standard Devintion } & \text { Trackine Errar } \\\hline 1 & 15.50 \% & 19.00 \% & 1.50 \% \\2 & 13.25 \% & 24.00 \% & 7.00 \% \\3 & 18.00 \% & 23.00 \% & 8.00 \% \\\text { Index } & 14.00 \% & 20.00 \% & \\\text { Risk-Free } & 5.00 \% & &\end{array}$$

---

Definitions:

Average Tax Rate

The ratio of the total amount of taxes paid by an individual or business to the total income or profit earned.

Fiscal Year

A twelve-month period used for accounting and financial reporting purposes, which may or may not align with the calendar year.

Unfunded Mandate

A statute or regulation that requires a state or local government to perform certain actions, with no money provided for fulfilling the requirements.

No Child Left Behind

A U.S. Act of 2001 aimed at closing the achievement gap with accountability, flexibility, and choice, so that no child is left behind in education.