The Ranking Differences Between the Sharpe, Treynor, and Jensen Performance

question 73

True/False

The ranking differences between the Sharpe, Treynor, and Jensen performance measures occur because of the differences in diversification.

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Definitions:

Equity Firm

A company that invests in businesses, typically by purchasing equity stakes, with the aim of earning returns through dividends or capital appreciation.

Shares Outstanding

The total number of shares of a company that are currently owned by shareholders, including both public investors and company officers or insiders.

Borrow

To receive something of value with the promise to return it or its equivalent value at a future date.

Unlevered Cost

The cost of funding a project without any debt, reflective of the project's risk as if financed entirely by equity.