___________ measures investment performance as the ratio of the portfolio risk premium over the portfolio beta. This approach gives the amount of risk premium per unit of beta.
A) The Treynor ratio
B) The raw return
C) Jensen's alpha
D) The Sharpe ratio
E) The Jensen-Treynor alpha

Question

Quizplus · Accepted Answer

The Treynor ratio measures investment performance by comparing the risk premium earned by the portfolio to the systematic risk taken on as measured by beta. This ratio helps investors to evaluate the excess return earned per unit of risk taken on. It is particularly useful when evaluating the performance of portfolios that are heavily influenced by market risk.

___________ Measures Investment Performance as the Ratio of the Portfolio