Why is the Sharpe ratio frequently referred to as a 'risk-adjusted' measure of performance?

Question:

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals of Investments

ISBN: 978-0132926171

3rd edition

Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey

See More Books

Question Posted: Mar 13, 2018 08:39 AM

See More Questions

What is a Sharpe ratio?
You recently graduated from college, and your job search led you to East Coast Yachts. Because you felt the companys business was seaworthy, you accepted a job offer. The first day on the job, while...
1. What advantages do the mutual funds offer compared to the company stock? 2. Assume that you invest 5 percent of your salary and receive the full 5 percent match from S&S Air. What EAR do you earn...
Which of the following statements about close buyer-seller relationships in business markets is FALSE? Long-term commitments on larger order quantities often cause the supplier to raise its selling...
A cylinder is fitted with a 4-in.-diameter piston that is restrained by a linear spring (force proportional to distance) as shown in Fig. P3.16. The spring force constant is 400 lbf/in. and the...
Evaluate the integral. x' + 2x Jo x* + 4x? + 3
There is loss in marginal costing when there is production but no sales.
What principle(s) from the conceptual framework does Hen day Limited use in each of the following situations? (a) Henday includes the activities of its subsidiaries in its financial statements. (b)...
Knowledge Check 01 Ten years ago, Cary Company issued $1,500,000 of 7 percent, 10-year bonds at a price of 95. On the maturity date of January 2, after making the final interest payment and recording...
Some people might recall being told to be sure to put on a hat when outside in cold weather because "you lose all the heat out the top of your head." Comment on the validity of this statement.
What is the risk of a portfolio consisting of a risk-free asset and a risky security?
If a security's correlation with the market return increases, will its beta get larger or smaller?
Solve Problem. 0.05x + 0.25(30 - x) = 3.3
Brice Looney owns a small retail ice cream parlor. He is considering expanding the business and has identified two attractive alternatives. One involves purchasing a machine that would enable Mr....
A positively charged particle initially at rest on the ground moves $4.0 \mathrm{~m}$ upward in $2.00 \mathrm{~s}$. If the particle has a chargeto-mass ratio of $10 \mu \mathrm{C} / \mathrm{g}$...
Central States Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Central States purchased goodwill as part of the acquisition of Sheldon Wireless Company, which had...
Shown below is selected information from the financial records of Merris Corporation as of December 31: Required a. Determine which of the above items will appear on the statement of cash flows and...
Pippa runs a photographic studio specializing in black and white portrait photography. Clients book a one hour studio session and are entitled to receive two large photographs of their choice from...
Evaluate each expression for a = -3, b = 64, and c = 6. 3a+ Vb
Interest Compounded Annually. When P dollars is invested at interest rate i, compounded annually, for t years, the investment grows to A dollars, where A = P(1 + i) t . Trevor's parents deposit $7800...
(a) Identify the three activities that pertain to a petty cash fund, and indicate an internal control principle that is applicable to each activity. (b) When are journal entries required in the...
The use of a bank contributes significantly to good internal control over cash. Is this true? Why or why not?
Lori Figgs is confused about the lack of agreement between the cash balance per books and the balance per the bank. Explain the causes for the lack of agreement to Lori, and give an example of each...
Maddox Resources has credit sales of $ 1 8 0 , 0 0 0 yearly with credit terms of net 3 0 days, which is also the average collection period. Maddox does not offer a discount for early payment, so its...
Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and events in its long-term investments. 2017 Jan. 5 Selk purchased 50,000 shares (25% of total)...
Equipment with a book value of $84,000 and an original cost of $166,000 was sold at a loss of $36,000. Paid $100,000 cash for a new truck. Sold land costing $330,000 for $415,000 cash, yielding a...

Why is the Sharpe ratio frequently referred to as a 'risk-adjusted' measure of performance?

Question:

Step by Step Answer:

The Sharpe ratio provi...View the full answer

Fundamentals of Investments

Students also viewed these Corporate Finance questions