The Sharpe ratio is best utilized for evaluating
A) Bonds
B) Low-risk stocks
C) High-risk stocks
D) Government securities
E) Well-diversified portfolios

Question

Quizplus · Accepted Answer

The Sharpe ratio was specifically developed for evaluating the performance of well-diversified portfolios. It takes into account both the portfolio's return and its risk, as measured by volatility. Therefore, it is useful for investors who want to compare the performance of different investment strategies, such as choosing between two mutual funds or deciding how much of their portfolio should be allocated to stocks versus bonds.

The Sharpe Ratio Is Best Utilized for Evaluating