For a poorly diversified portfolio the appropriate measure of portfolio performance would be
A) the Treynor measure because it evaluates portfolio performance on the basis of return and diversification.
B) the Sharpe measure because it evaluates portfolio performance on the basis of return and diversification.
C) the Treynor measure because it uses standard deviation as the risk measure.
D) the Sharpe measure because it uses beta as the risk measure.
E) the Jensen measure because it measures the risk-adjusted performance.

Question

Quizplus · Accepted Answer

The Sharpe measure is appropriate for poorly diversified portfolios as it evaluates performance based on total risk (standard deviation), which is relevant when diversification is lacking.

For a Poorly Diversified Portfolio the Appropriate Measure of Portfolio