The reward to volatility ratio is equal to 0.6 that is option C is correct answer.
The reward to volatility ratio may be defined as the ratio of difference between the expected return and risk-free rate and standard deviation. It is also known as the Treynor ratio. It is used to denote the amount of excess return which an individual gets on a particular business risk that he takes. Excess return is the amount which is earned more than the original return. According to the question the expected return is 16%, the risk-free rate is 4% and the standard deviation is 20%. Now, the formula for reward to volatility ratio is given as
reward to volatility ratio = (expected return - risk-free rate)/standard deviation
reward to volatility ratio = (16 - 4)/20
reward to volatility ratio = 12/20
reward to volatility ratio = 0.6 which is the required answer.
Learn more about Reward to volatility ratio at:
brainly.com/question/7896363
#SPJ4
