Welcome to the College Prep Confidential Podcast

Sharpe Ratio Calculator

How does the Sharpe Ratio Calculator work?
Calculates the Sharpe ratio given return on assets, risk free rate, and standard deviation

This calculator has 3 inputs.
What 1 formula is used for the Sharpe Ratio Calculator?
Sharpe Ratio = (Ra - Rf)/sigma

For more math formulas, check out our Formula Dossier
What 4 concepts are covered in the Sharpe Ratio Calculator?
expected return
amount of profit or loss an investor anticipates on an investment

risk free rate
the rate of return offered by an investment that carries zero risk

Sharpe ratio
measures the excess return (or risk premium) per unit of deviation in an risky investment
(Return on Assets - Risk Free Rate)/Standard Deviation

standard deviation
a measure of the amount of variation or dispersion of a set of values. The square root of variance

00:00 Intro
00:05 Sharpe Ratio Calculator concepts
00:39 Sharpe Ratio Calculator parameters
01:01 Sharpe Ratio Problem Summary
01:13 Sharpe Ratio Definition
01:21 Risk Premium Calculation
01:34 Sharpe Ratio Calculation