The reward-to-variability ratio (Sharpe ratio) measures:
A) return above the risk-free rate.
B) excess return per unit of total risk.
C) total risk per unit of excess return.
D) return above the risk-free rate relative to beta.

Question

Quizplus · Accepted Answer

The Sharpe ratio measures the excess return (return above the risk-free rate) per unit of total risk (standard deviation of the portfolio's return).

The Reward-To-Variability Ratio (Sharpe Ratio) Measures