I'm taking a quiz, and trying to calculate the annualized Sharpe ratio of 11 years' worth of SPY fund monthly returns vs. a risk free investment return of 1.5%. When I write the function in Excel as
=(AVERAGE(G3:G145)-0.015)/(STDEV(G3:G145)*Sqrt(12)), I'm getting -0.16. In my spreadsheet, G3:G145 is the range of monthly returns for the SPY fund. The possible answers for the question on the quiz are .56, .53, .50, and .48, so clearly I'm far off. What would be the correct way to write this formula in Excel?
Also, here are the exact instructions given by the quiz:
The annual Sharpe Ratio calculates the difference between the annual return of a stock and the annual return of a risk-free investment in government bonds - then divides that difference by the annualized standard deviation of returns of the stock.
Estimate the annualized standard deviation of returns by multiplying the monthly population standard deviation of returns by the square root of 12.