Consider the Sharpe and Treynor Performance Measures

question 27

Multiple Choice

Consider the Sharpe and Treynor performance measures.When a pension fund is large and well diversified in total and it has many managers,the __________ measure is better for evaluating individual managers while the __________ measure is better for evaluating the manager of a small fund with only one manager responsible for all investments that may not be fully diversified.

• A) Sharpe; Sharpe
• B) Sharpe; Treynor
• C) Treynor; Sharpe
• D) Treynor; Treynor

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Definitions:

Pretax Income

The amount of income earned by a business before any taxes are deducted.