A Disadvantage of the Treynor and Sharpe Measures Is That

question 39

Multiple Choice

A disadvantage of the Treynor and Sharpe measures is that

• A) They produce absolute performance rankings.
• B) The beta and standard deviation are static.
• C) They are both difficult to compute.
• D) They produce relative performance rankings.
• E) They give very different measurements for well-diversified portfolios.

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Definitions:

Profit

The financial gain obtained when the revenue from selling goods or services exceeds the costs involved in their production or provision.

Production Function

A production function is an equation that describes the maximum output of a good or service an economy or firm can produce given the input resources it has available.

Labor

The human effort, whether physical or mental, used in the production of goods and services.

Output

The total amount of goods or services produced by a firm, industry, or economy.