The standard deviation and returns for the funds over the past 10 years are listed here. Assuming a risk-free rate of 4 percent, calculate the Sharpe ratio for each of these. In broad terms, what do you suppose the Sharpe ratio is intended to measure?
10-Year Annual Return Standard Deviation
Arias S&P 500 Index Fund 9.15% 19.35%
Arias Small-Cap Fund 14.05 26.82
Arias Large-Company Stock Fund 9.53 23.82
Arias Bond Fund 8.73 11.45