# portfolio ( corner ) standard divation and sharpe

1.I want to know how to compute portfolio sharp ratio and std. deviation, say, portfolio P1 consists of 70% corner portfolio 1 (sharp ratio=2, standard deviation=0.8), 30% corner portfolio 2 (sharp ratio=1.7, standard deviation=0.9)? anyone can help? how to compute portfolio P1 sharp ratio and std. deviation? 2. now I have another portfolio P2 of 105% corner portfolio 1 and risk free asset rf(-5%) how to compute portfolio P2 sharp ratio and std. deviation?

what is sharpe ratio? rp - rf / sigma f given that you have provided nothing about the individual portfolio returns… you cannot do it with the data you have provided. calculate 0.7 * rp1 + 0.3 * rp2 = Rp 0.7^2 * 0.8^2 + 0.3^2 * 0.9^2 + 2 * 0.7 * 0.3 * 0.8 * 0.9 * cor p1,p2 = sigmap^2 sometimes a simplifying assumption that the cor p1,p2 = 0 may be made. now get sigma p Rp - rf / sigma p = sharpe ratio of the corner portfolio. when risk free rate is present… what is return of rf? rp = 1.05 * rp1 - (.05) * rf now sigma p = sigma p1 get sharpe ratio again.

I have already checked the answer, sharp of P1 =0.7*2+1.7*0.3 Sigma p1=0.7*0.8+0.3*0.9. because corrleation is 1 for adjacent corner portf. for P2, sharp and sigma is the same after adding risk free asset, no change