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Sharpe's measure of portfolio performance compares the risk premium on a portfolio to: Question 32 options: a) a broad-based market index such as the S&P 500 index. b) the portfolio's standard deviation of return. c) the portfolio's beta. d) the prevailing risk-free rate of return.

Respuesta :

mltn1980

Answer:

b) the portfolio's standard deviation of return.

Explanation:

The Sharpe ratio is defined as:

Sharpe ratio=  

Rp − Rf

========

  SD

​  

where:

Rp = Portfolio Return

Rf = Risk-Free Rate

SD = Standard Deviation

​

It tries to give an investor a measure of how much it gain with an investment compared to the risk taken.

Standard Deviation is the variable use to describe the volatility or total risk of the portfolio.  

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