Q1: Using basic terminology, explain why the Sharpe Ratio is a useful computation (i.e., from the perspective of E(r) and ).
Q2: A colleague assumes that the relationship between the number of stocks in a portfolio and risk reduction is perfectly linear- state your opinion.
Q3: A friend, who is studying for the CFA examination asks you about the impact of standard deviation(s) on the Treynor Ratio- indicate the information you’d provide to your friend.
Q4: You overhear a newly-hired co-worker state that higher stock pricing variance is synonymous with lower overall risk; if asked to offer an opinion, explain how you would respond.
Q5: As a new intern at an asset management company, you are tasked with explaining the distinctions between correlation and covariance- outline what details you would present.
