Answer:
b) the portfolio's standard deviation of return.
Explanation:
The Sharpe ratio is defined as:
Sharpe ratio=
Rp − Rf
========
SD
where:
Rp = Portfolio Return
Rf = Risk-Free Rate
SD = Standard Deviation
It tries to give an investor a measure of how much it gain with an investment compared to the risk taken.
Standard Deviation is the variable use to describe the volatility or total risk of the portfolio.
