Rodney holds a portfolio of risky assets that represents his entire risky investment.To evaluate the performance of Rodney's portfolio, in which order would you complete the steps listed? I) Compare the Sharpe measure of Rodney's portfolio to the Sharpe measure of the best portfolio.
II) State your conclusions.
III) Assume that past security performance is representative of expected performance.
IV) Determine the benchmark portfolio that Rodney would have held if he had chosen a passive strategy.
A)I, III, IV, II
B)III, IV, I, II
C)IV, III, I, II
D)III, II, I, IV

Question

Quizplus · Accepted Answer

First, assume past performance is indicative of future performance (III). Then, determine the benchmark portfolio for comparison (IV). Next, compare the Sharpe ratios (I). Finally, state conclusions based on the analysis (II).

Rodney Holds a Portfolio of Risky Assets That Represents His