The Sharpe Measure Uses ________ as the Measure of Risk

question 46

Multiple Choice

The Sharpe measure uses ________ as the measure of risk and the Treynor measure uses ________ as the measure of risk.

• A)standard deviation; variance
• B)beta; variance
• C)standard deviation; beta
• D)beta; standard deviation

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Definitions:

Risk Preferences

Denote an individual's or entity's tolerance for risk, influencing decision-making in uncertain situations.

Expected Value

The calculated average of all possible outcomes of a random variable, weighted by their probabilities.

Risk Premium

The extra return above the risk-free rate demanded by investors for holding a risky asset.

Fire Insurance

A type of property insurance that covers damage and losses caused by fire, providing financial compensation to the insured.