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Explain How to Calculate Jensen's Alpha and the Treynor Ratio

question 40

Essay

Explain how to calculate Jensen's alpha and the Treynor ratio. What does each measure?
If Jensen's alpha is positive for a portfolio, what do you know about the Treynor ratio for the portfolio?


Definitions:

Human Body

The entire structure of a human being encompassing physical, biological, and chemical processes that work together to maintain life.

Carbon

A chemical element with symbol C and atomic number 6, essential to all known life forms and the basis of organic chemistry.

Cation

Ion carrying a positive charge.

Electrons

Subatomic particles with a negative charge, orbiting the nucleus of an atom and involved in chemical reactions.

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