Investment Formula #6 Flashcards
(10 cards)
1
Q
What is this formula?
Tp=rp-rf/Bp
A
Treynor ratio
2
Q
What does Rp represent?
A
Return of the portfolio
3
Q
What does rf represent?
A
Risk free rate
4
Q
What does Bp represent?
A
Beta
5
Q
What is the trainer ratio used for?
A
To express the ratio of the excess return of the portfolio compared to its beta
6
Q
What other formula uses beta to express risk?
A
The Jensen/Alpha
7
Q
When do you use this formula?
A
When they ask you to solve for the Treynor ratio
8
Q
Which R2 measurement do you use this?
A
When it is above 60 R2
9
Q
When R2 is above 60 do use Treynor or Alpha first?
A
Alpha
10
Q
For trainer ratio, do you use whole numbers or decimals?
A
Whole numbers 9% should be entered as 9.
