The Sharpe Ratio Is Useful in

question 34

Multiple Choice

The Sharpe ratio is useful in

• A)measuring the standard deviation of returns.
• B)understanding how returns increase relative to risk increases.
• C)analyzing returns on variable-rate bonds.
• D)assessing the effects of inflation.

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Definitions:

Marginal Utility

The additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service.

Income

The money received, typically on a regular basis, for work or through investments.

Utils Per Dollar

A hypothetical measurement of the utility or satisfaction a consumer gains from spending one dollar on a good or service.

Risk-Averse

Characteristic of preferring to avoid risk, leading to preference for safer, more certain outcomes over riskier ones.