Multiple choice

Sharpe and Treynor ratios are measures of

  1. average return

  2. risk

  3. risk adjusted return

  4. beta of the portfolio
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Sharpe Ratio and Treynor Ratio are both risk-adjusted performance measures. Sharpe Ratio uses total risk (standard deviation), while Treynor Ratio uses systematic risk (beta). Both divide excess return by a risk measure, producing metrics that evaluate returns relative to risk taken.

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