Consider the Sharpe and Treynor performance measures.When a pension fund is large and 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.

Question

Quizplus · Accepted Answer

When a pension fund is large and has many managers, the Treynor measure is better for evaluating individual managers because it takes into account the systematic risk associated with the investments. On the other hand, the Sharpe measure is better for evaluating the manager of a small fund with only one manager responsible for all investments because it focuses on the total risk associated with the investments. Therefore, choice C is the best option.

Consider the Sharpe and Treynor Performance Measures