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The Sharpe Ratio is one of the most frequently used measures of portfolio performance. It is estimated in the following way.
- Dividing the overall portfolio return by the beta of the portfolio.
- Dividing the overall portfolio return by the standard deviation of the portfolio return.
- Dividing the excess return on the portfolio (i.e. portfolio return minus riskless rate of interest) by the beta of the portfolio.
- Dividing the excess return on the portfolio by the standard deviation of the return.
- None of the above.