The Sharpe Ratio Measures a Security's Return Relative to Which

question 89

Multiple Choice

The Sharpe ratio measures a security's return relative to which one of the following?

• A)total risk
• B)diversifiable risk
• C)market rate of return
• D)risk-free rate
• E)systematic risk

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Definitions:

CGT

Capital Gains Tax (CGT) is a tax on the profit earned from the sale of non-inventory assets that were purchased at a cost amount that was lower than the amount realized on the sale.

Flotation Cost

The total costs a company faces in issuing new securities, including underwriting, legal, and registration fees.

Cost of New Stock

The costs associated with issuing new shares of stock, including the underwriting and administrative costs.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.