The Sharpe's Measure for Jane Smith's Investment Portfolio Is 0

question 8

Multiple Choice

The Sharpe's measure for Jane Smith's investment portfolio is 0.40, while the Sharpe's measure for the market is 0.30. This information suggests that Smith's portfolio

• A) exhibits superior performance because its risk premium per unit of risk is above that of the market.
• B) exhibits poor performance because its risk premium per unit of risk is below that of the market.
• C) is inadequately diversified, and more securities should be added to the portfolio in order to bring it in line with the market.
• D) is overly diversified, and some securities should be sold to bring the portfolio in line with the market.

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Definitions:

Heterosexual Married Couples

Pairs of opposite-sex partners who are legally married to each other.

Eros

In John Lee’s typology of love, the love of beauty.

Passionately

With intense, strong feelings or emotions, often used to describe romantic or sexual feelings.