The Sharpe ratio is best used to evaluate which one of the following?
A)corporate bonds
B)government bonds
C)Treasury bills
D)individual stocks
E)diversified portfolios

Question

Quizplus · Accepted Answer

The Sharpe ratio is used to assess the risk-adjusted performance of a portfolio, making it most suitable for evaluating diversified portfolios. The ratio measures the excess return earned per unit of risk taken by the portfolio, with a higher ratio indicating better performance. It is less relevant for evaluating individual stocks or fixed income securities such as bonds or Treasury bills.

The Sharpe Ratio Is Best Used to Evaluate Which One