#1
What is the key objective of performance measurement in investment?
To evaluate the performance of a portfolio
ExplanationPerformance measurement assesses portfolio performance.
#2
Which of the following is NOT an example of an investment performance measurement metric?
Price-Earnings Ratio
ExplanationPrice-Earnings Ratio is not typically used for investment performance measurement.
#3
What is the formula for calculating the Sharpe Ratio?
(Portfolio return - Risk-free rate) / Portfolio standard deviation
ExplanationSharpe Ratio measures risk-adjusted return relative to volatility.
#4
What is the main limitation of using the Sharpe Ratio as a performance measure?
It does not account for the portfolio's exposure to market risk
ExplanationSharpe Ratio overlooks portfolio's market risk exposure.
#5
Which of the following is NOT a common benchmark used in performance measurement?
Portfolio Standard Deviation
ExplanationPortfolio Standard Deviation is a measure of volatility, not a benchmark.
#6
What is the formula for calculating the Information Ratio?
(Portfolio return - Benchmark return) / Tracking Error
ExplanationInformation Ratio assesses active management relative to a benchmark.