sharpe

How Do We Use Sharpe Ratio to Make Investment Decisions?Understanding the Sharpe RatioThe Sharpe Ratio is an essential tool for investors and financial analysts to assess the risk-adjusted return of an investment. It was developed by Nobel laureate William F. Sharpe and is widely used to evaluate the potential return of an investment relative to its volatility or risk.Calculating the Sharpe RatioThe Sharpe Ratio is calculated by subtracting the risk-free rate of return from the investment's return and dividing the result by the standard deviation of the investment's return. The resulting ratio provides a measure of the excess return per…