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The asset rate of returns is the profit on a particular investment; it includes any change in the asset value, interest, commission or dividends and so, all other cash-flows which an investors receive or pays due to the investment.

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Calculate total risk

Notice that the problem does not give you a risk-free investment, so the computation of the Sharpe ratio becomes: $$SR = \frac{E(r)}{\sqrt{VAR(r)}}$$ Year 1: $r_{p} = E(r) = \frac{1}{n}\sum_{i = 1} …
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