a.
To calculate:
The Treynor ratio and the Sharpe measure for portfolio X, which is comprised of U.S. common stocks, and S&P
Introduction:
Treynor Ratio is a risk-adjusted measurement of return. It helps in computing the reward-to-volatility ratio. This ratio provides excess return over expected in regard to systematic risk i.e. beta.
Sharpe ratio is a ratio which helps in computing the reward-to-volatility ratio. This ratio gives an understanding of the incremental return which an investor will expect to earn on every
b.
To determine:
The reason of difference in the results obtained by using Treynor ratio and Sharpe ratio for evaluation of performance of portfolio X and S&P
Introduction:
Treynor Ratio is a risk-adjusted measurement of return. It helps in computing the reward-to-volatility ratio. This ratio provides excess return over expected in regard to systematic risk i.e. beta.
Sharpe ratio is a ratio which helps in computing the reward-to-volatility ratio. This ratio gives an understanding of the incremental return which an investor will expect to earn on every
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