When Applying the Sharpe Ratio to Assess Portfolio Management, Which

question 17

Multiple Choice

When applying the Sharpe ratio to assess portfolio management, which of the following statements is NOT true?

• A)The higher the Sharpe ratio value then the risk-adjusted return is more favourable
• B)The higher the Sharpe ratio value then the risk-adjusted return is less favourable
• C)The lower the Sharpe ratio value then the risk-adjusted return is more favourable
• D)The Sharpe ratio cannot be used to determine the performance of a portfolio

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Definitions:

Spreadsheet

A digital tool that allows for the arrangement of data in rows and columns to facilitate calculation, analysis, and storage of information.

Labor Intensive

Describes a process or industry that requires a large amount of human labor to produce its goods or services.

Machine Intensive

Describes a production process or industry that relies heavily on machinery and equipment for manufacturing goods, typically resulting in higher fixed costs.

Predetermined Overhead Rates

Predetermined overhead rates involve estimating indirect manufacturing costs and applying them to specific jobs or departments based on a consistent allocation base, facilitating more accurate product costing.