Under the _____ approach, excess returns on a portfolio are compared to the total risk of the portfolio.
A)Sharpe
B)Treynor
C)Jensen
D)More than one of the above

Question

Quizplus · Accepted Answer

The Sharpe ratio measures the performance of an investment compared to a risk-free asset, after adjusting for its risk. It is calculated by subtracting the risk-free rate from the return of the investment and dividing it by the standard deviation of the investment returns, thus comparing excess returns to the total risk of the portfolio.

Under the _____ Approach, Excess Returns on a Portfolio Are