Question

Describe situations in which the Sharpe Index, Treynor Measure, and Information Ratio would be the appropriate...

Describe situations in which the Sharpe Index, Treynor Measure, and Information Ratio would be the appropriate risk adjustment technique.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Sharpe ratio- It should be used in the situation where the investor has to choose/rank asset for a portfolio when the portfolio constitutes of only one asset.

Treynor Measure- It should be used in the situation where the investor has to choose/rank asset for a portfolio when the portfolio already constitutes of atleast one asset (that is to make a portfolio of more than 1 asset).

Information Ratio- It should be used when we have to compare and rank the portfolio's performance based on Benchmark's performance.
Information Ratio measures the fund’s performance relative to its benchmark and also adjusts it for the volatility in the dispersion between the fund and the benchmark.

Please do rate me and mention doubts, if any, in the comments section.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A measure of risk-adjusted performance that is often used is the Sharpe ratio. The Sharpe ratio...
A measure of risk-adjusted performance that is often used is the Sharpe ratio. The Sharpe ratio is calculated as the risk premium of an asset divided by its standard deviation. The standard deviation and return of the funds over the past 10 years are listed in the following table. Calculate the Sharpe ratio for each of these funds. Assume that the expected return and standard deviation of the company stock will be 17 percent and 70 percent, respectively. Calculate the...
Which measure would you use to know whether alpha is truly significant or just the result...
Which measure would you use to know whether alpha is truly significant or just the result of random chance? Group of answer choices Sharpe ratio Jensen's alpha Treynor ratio Jensen-Treynor alpha Information ratio
Considering different measures of risk-adjusted return, what is the main difference between the Sharpe ratio and...
Considering different measures of risk-adjusted return, what is the main difference between the Sharpe ratio and Treynor ratio? Why would you choose the Treynor ratio over the Sharpe ratio?
Which of the following statements is correct? Choose all that are correct. The Sharpe ratio is...
Which of the following statements is correct? Choose all that are correct. The Sharpe ratio is a risk-adjusted performance measure. The Sharpe ratio measures compensation for the total risk an investor takes on. The Sharpe ratio is also called the variability-to-reward ratio. The higher the Sharpe ratio, the more investors are rewarded per unit of risk.
You have been given the following return information for a mutual fund, the market index, and...
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2015 −16.4 % −32.5 % 3 % 2016 25.1 20.3 4 2017 13.2 11.8 2 2018 6.2 8.0 5 2019 −1.68 −3.2 3 What are the Sharpe and Treynor ratios for the fund? Sharpe ratio Treynor ratio
Consider the following information for a mutual fund, the market index, and the risk-free rate. You...
Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2008 –15.2 % –24.5 % 1 % 2009 25.1 19.5 3 2010 12.4 9.4 2 2011 6.2 7.6 4 2012 –1.2 –2.2 2 What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.)   Sharpe...
Consider the following information for a mutual fund, the market index, and the risk-free rate. You...
Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2008 –18.20 % –35.5 % 2 % 2009 25.1 20.6 5 2010 13.5 12.7 2 2011 6.8 8.4 6 2012 –1.86 –4.2 3 What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Sharpe...
A portfolio generates an annual return of 16%, a beta of 1.2, and a standard deviation...
A portfolio generates an annual return of 16%, a beta of 1.2, and a standard deviation of 19%. The market index return is 12% and has a standard deviation of 16%. What is the Sharpe measure of the portfolio and what is the Treynor measure of the portfolio if the risk-free rate is 6%? Explain the similarities and differences between the Sharpe ratio and Treynor measure. Also, explain the most appropriate application for each. Paragraph
You have been given the following return information for a mutual fund, the market index, and...
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2015 −17.6 % −34.5 % 2 % 2016 25.1 20.5 4 2017 13.4 12.4 2 2018 6.6 8.4 5 2019 −1.8 −4.2 3 What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to...
You have been given the following return information for a mutual fund, the market index, and...
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.97. Year Fund Market Risk-Free 2011 –21.2 % –40.5 % 2 % 2012 25.1 21.1 4 2013 14.0 14.2 2 2014 6.2 8.8 4 2015 –2.16 –5.2 3 What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT