Consider the Sharpe and Treynor Performance Measures

question 14

Multiple Choice

Consider the Sharpe and Treynor performance measures.When a pension fund is large and has many managers,the __________ measure is better for evaluating individual managers while the __________ measure is better for evaluating the manager of a small fund with only one manager responsible for all investments.

• A) Sharpe,Sharpe
• B) Sharpe,Treynor
• C) Treynor,Sharpe
• D) Treynor,Treynor
• E) Both measures are equally good in both cases.

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Definitions:

Time Period

A specific duration for which financial or operational activities are measured, analyzed, and reported.

Lessee

An entity or individual that leases or rents property or equipment from another.

Operating Lease

A leasing agreement allowing a lessee to use an asset without owning it, typically with shorter terms than a capital lease.

Ownership

The legal right or interest in something, often involving assets like property, businesses, or investments.