The Measure of Performance Which Divides the Portfolio's Risk Premium

question 49

Multiple Choice

The measure of performance which divides the portfolio's risk premium by the portfolio's beta is the

• A) Sharpe measure.
• B) Jensen measure.
• C) Fama measure.
• D) Alternative components model (MCV).
• E) Treynor measure.

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Definitions:

Long-run Equilibrium

A state in which all factors of production and costs are variable, allowing firms in a perfectly competitive market to make zero economic profit, balancing supply and demand.

Maximum Profits

The highest possible financial gain that a business can achieve in a given period, optimizing revenue while minimizing costs.

Long-run Equilibrium

A state in which supply equals demand and all factors of production and markets are in balance, typically considered in the context of perfect competition.