Examlex

Solved

Sharpe's Measure of Portfolio Performance Compares the Risk Premium on a Portfolio

question 41

True/False

Sharpe's measure of portfolio performance compares the risk premium on a portfolio to the portfolio's standard deviation of return.


Definitions:

Profitability Index

A financial tool used to determine the relationship between the costs and benefits of a proposed project, calculated by dividing the present value of future cash flows by the initial investment.

Investment Amounts

The total funds allocated by individuals or businesses towards investment vehicles like stocks, bonds, or real estate for the purpose of earning returns.

Required Rate

The minimum return or yield that investors expect to receive on an investment, taking into account the risk level and market conditions.

Cost of Capital

The rate of return a company must earn on its investments to satisfy its investors or lenders.

Related Questions