The Sharpe's Measure for Jane Smith's Investment Portfolio Is 0

question 8

Multiple Choice

The Sharpe's measure for Jane Smith's investment portfolio is 0.40, while the Sharpe's measure for the market is 0.30. This information suggests that Smith's portfolio

• A) exhibits superior performance because its risk premium per unit of risk is above that of the market.
• B) exhibits poor performance because its risk premium per unit of risk is below that of the market.
• C) is inadequately diversified, and more securities should be added to the portfolio in order to bring it in line with the market.
• D) is overly diversified, and some securities should be sold to bring the portfolio in line with the market.