How Is the Sharpe Ratio Defined as It Applies to Security

question 33

Multiple Choice

How is the Sharpe ratio defined as it applies to security returns?

• A)Average return / Risk premium
• B)Standard deviation / Risk premium
• C)Average return / Standard deviation
• D)Risk premium / Average return
• E)Risk premium / Standard deviation

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Definitions:

Enforceable

Refers to a legal agreement or contract that can be legally compelled to be performed or executed as per the terms agreed upon by the parties involved.

Forbearance

A creditor's agreement to postpone, delay, or withhold legal action despite the debtor's failure to meet the terms of the contract.

Statute Of Limitations

A federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced.

Consideration

Something of value exchanged between parties in a contract, which is required for the agreement to be legally binding.