1. What is a common weakness of Jensens alpha and the Treynor ratio?

2. What is one advantage and one disadvantage of the Sharpe ratio?

3. Most sources report alphas and other metrics relative to a standard benchmark, such as the S&P 500. When might this method be an inappropriate comparison?

4. What is the Sharpe ratio, Treynor ratio, and Jensens alpha for each portfolio?

A stock has an annual return of 12 percent and a standard deviation of 56 percent. Assuming returns are normally distributed, what is the smallest expected loss over the next year with a probability of 1 percent? Does this number make sense? Why or why not?