Description
- Explain how the Sharpe Ratio is used to manage risk.
250 words with APA reference
Explanation & Answer
Please find attahed. Thank you.
Outline
I.
Introduction
II.
Conclusion
III.
References
Attached.
Running head: THE USE OF THE SHARPE RATIO IN MANAGING RISKS
The Use of the Sharpe Ratio in Managing Risks
Name
Institution
THE USE OF THE SHARPE RATIO IN MANAGING RISKS
2
The Use of the Sharpe Ratio in Managing Risks
Sharpe ratio is commonly used in ascertaining the extra return that an individual obtains
for the excess volatility endured after holding an asset that has more risks. During investment, it
is imperative for the investors to take into considerations both the returns and the risks that may
arise from the investment (Peñaranda, 2016). For this reason, the sharp ratio, is used to access the
returns and the risks that might be common in a particular investment. In measuring the risk, the
Sharpe ratio carries out an analysis of the portfolio returns. In this case, it determines whether the
returns are obtained from making of excellent investment decisions or it emerges from...
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