The Sharpe Ratio Measures ________

question 87

Multiple Choice

The Sharpe ratio measures ________.

• A) the extra reward per unit of risk
• B) the extra risk per unit of reward
• C) the increase in mean per unit of risk
• D) the extra variance per unit of reward

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Definitions:

Exchange Rate

The value of one currency for the purpose of conversion to another, determining the amount of one currency that can be exchanged for a unit of another currency.

Liquidity Preference Theory

A theory suggesting that people prefer to hold their wealth in liquid form for ease of transactions and as a precaution against uncertainty.

Interest Rate

The cost of borrowing money or the return on investment for savings, typically expressed as a percentage of the principal amount per period.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, bank deposits, and other liquid assets.