The Sharpe, Treynor, and Jensen Portfolio Performance Measures Are Derived

question 49

Multiple Choice

The Sharpe, Treynor, and Jensen portfolio performance measures are derived from the CAPM,

• A) therefore, it does not matter which measure is used to evaluate a portfolio manager.
• B) however, the Sharpe and Treynor measures use different risk measures. Therefore, the measures vary as to whether or not they are appropriate, depending on the investment scenario.
• C) therefore, all measure the same attributes.
• D) therefore, it does not matter which measure is used to evaluate a portfolio manager. However, the Sharpe and Treynor measures use different risk measures, so therefore, the measures vary as to whether or not they are appropriate, depending on the investment scenario.
• E) None of the options are correct.

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Definitions:

Output

The complete sum of outputs, whether goods or services, created by an enterprise, industry, or economic entity.

Marginal Revenue

The revenue enhancement a company experiences by selling another unit of a product or service.

Total Revenue

The total amount of money received by a firm from sales of its products or services, calculated as the quantity sold times the price per unit.

MC < MR

A condition in economic theory where marginal cost is less than marginal revenue, suggesting that increasing production would be profitable.