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What does the Sharpe ratio measure?

  1. A Excess return per unit of total risk, measured by standard deviation
  2. B Return relative to a benchmark
  3. C Return per unit of systematic risk
  4. D Downside deviation only
Answer

Excess return per unit of total risk, measured by standard deviation

The Treynor ratio uses beta instead of standard deviation, and the Sortino ratio uses downside deviation.

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