Which portfolio measurement uses the mean excess return in the numerator divided by the amount of residual risk that the investor incurred in pursuit of those excess returns?
A) Jensen measure
B) Fama measure
C) Sharpe measure
D) Treynor ratio
E) Information ratio

Question

Quizplus · Accepted Answer

The Information ratio uses the mean excess return over a benchmark in the numerator and divides it by the amount of residual risk (tracking error) to measure the risk-adjusted return of an investment portfolio.

Which Portfolio Measurement Uses the Mean Excess Return in the Numerator