What Does the Ratio in the Sharpe Index Indicate

question 6

Multiple Choice

What does the ratio in the Sharpe Index indicate?

• A)The risk per unit of return
• B)The amount at risk in any investment
• C)The amount of potential profit in an investment
• D)The return per unit of risk

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Definitions:

Withdraw

The act of removing funds from an account, decreasing investment in a particular asset, or retracting participation from an agreement or membership.

Nominal Annual Rate

The interest rate stated on a loan or investment agreement, not adjusting for inflation or the compounding of interest.

Developing-Country

A developing country refers to a nation with a lower level of industrialization, lower living standards, and sometimes a lower Human Development Index (HDI) compared to developed countries.

Compounded Monthly

An interest calculation method where interest is added to the principal sum at the end of each month, with each subsequent month earning interest on the new total.