For a Poorly Diversified Portfolio the Appropriate Measure of Portfolio

question 91

Multiple Choice

For a poorly diversified portfolio the appropriate measure of portfolio performance would be

• A) The Treynor measure because it evaluates portfolio performance on the basis of return and diversification.
• B) The Sharpe measure because it evaluates portfolio performance on the basis of return and diversification.
• C) The Treynor measure because it uses standard deviation as the risk measure.
• D) The Sharpe measure because it uses beta as the risk measure.
• E) None of the above.

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Definitions:

CPI

The Consumer Price Index, which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Proportion

An element, division, or percentage judged in comparison to its complete sum.

Ratio

A mathematical relationship between two numbers showing how many times the first number contains the second.

Exchange Rate

The conversion value of one currency in relation to another.