Ch.10 · Benchmarks and Performance Evaluation · medium
What is the Sharpe Ratio and what does it measure?
0% of students got this wrong
EXPLANATION
Sharpe Ratio = (Fund Return - Risk-Free Rate) / Standard Deviation. It measures the excess return earned per unit of total risk (standard deviation) taken. A higher Sharpe Ratio is better — it means more return is being generated per unit of risk. It allows comparison of funds with different risk levels on a common risk-adjusted basis.
Practising Chapter 10 one question at a time?
Try the full chapter — 100 questions, tracked score, weak area breakdown.