Questions
Single choice
The Sharpe ratio
Options
A.measures the systematic (market) risk
B.measures the idiosyncratic (individual) stock risk
C.measures the marginal return for risk
D.measures the marginal propensity to consume
E.measures risk of a portfolio
View Explanation
Verified Answer
Please login to view
Step-by-Step Analysis
The question asks about the Sharpe ratio and provides several possible characterizations.
Option 1: 'measures the systematic (market) risk' — This is not what the Sharpe ratio does. Systematic risk is typically captured by beta in the capital asset pricing model, not by the Sharpe ratio, which uses total risk (standard deviation) in its denominator. So this statement is inaccurate.
Op......Login to view full explanationLog in for full answers
We've collected over 50,000 authentic exam questions and detailed explanations from around the globe. Log in now and get instant access to the answers!
Similar Questions
The following data has been collected to appraise the following four funds: Fund A Market Index Return 8.25% 8.60% Beta 0.91 1.00 Standard deviation 3.24% 3.55% Tracking error* 0.43% Tracking error is the standard deviation of the difference between the Fund Return and the Market Index Return. The risk-free rate of return for the relevant period was 4%. Use the above information to solve the following questions: The M2 is_______
The following data has been collected to appraise the following four funds: Fund A Market Index Return 8.25% 8.60% Beta 0.91 1.00 Standard deviation 3.24% 3.55% Tracking error* 0.43% Tracking error is the standard deviation of the difference between the Fund Return and the Market Index Return. The risk-free rate of return for the relevant period was 4%. Use the above information to solve the following questions: The M2 is_______
RAROC (Risk-Adjusted Return on Capital) is calculated as:
You have been provided the following annual return data about 4 shares over a sample period 2020-2024.Which security would you choose to invest funds in if your sole objective was to minimise risk per unit of return?[Fill in the blank]
More Practical Tools for Students Powered by AI Study Helper
Making Your Study Simpler
Join us and instantly unlock extensive past papers & exclusive solutions to get a head start on your studies!