ACFE CFE-Financial-Transactions-and-Fraud-Schemes Q&A - in .pdf

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  • Exam Code: CFE-Financial-Transactions-and-Fraud-Schemes
  • Exam Name: Certified Fraud Examiner - Financial Transactions and Fraud Schemes Exam
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NEW QUESTION: 1
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NEW QUESTION: 3
You are evaluating 5 portfolio managers (A, B, C, D, and E) whose Sharpe ratios are 0.25, 0.41, 0.92,
0.78, and 0.51, respectively. Which manager would most risk-averse investors prefer?
A. None of these answers is correct.
B. A.
C. E.
D. C.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
The Sharpe measure of risk-adjusted performance is equal to (rbar_p - rbar_f)/sigma_p, where rbar_p is the mean portfolio return, rbar_f is the mean risk-free return, and sigma_p is the standard deviation of portfolio return. Thus, the manager with the highest Sharpe ratio is generating the largest return in excess of the risk free rate, per unit of risk assumed. This is manager C, with a Sharpe ratio of 0.92.

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