Recommendations & StrategiesQuestion 48 of 100
The Sharpe ratio measures:
a.Total return without regard to risk
b.A portfolio's dividend yield
c.The correlation between two assets
d.Risk-adjusted return, using excess return over the risk-free rate per unit of total risk (standard deviation)
Explanation
The Sharpe ratio divides a portfolio's return in excess of the risk-free rate by its standard deviation, expressing return per unit of total risk. Higher values indicate better risk-adjusted performance. It is a key tool in performance measurement.
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