A
Acadi
Fi
Courses
Knowledge Hub
Community
Practice
Pricing
About
Search
⌘K
Question Bank
/
CFA
/
Level III
/
Equity Investments
Equity Investments
Easy
A portfolio manager evaluating Brookfield Renewable Partners observes that the stock's information ratio is 0.45 and its Sharpe ratio is 0.62. Which statement best describes the difference between these two measures?
A
The Sharpe ratio measures total risk-adjusted return relative to the risk-free rate, while the information ratio measures active return relative to active risk (tracking error)
B
The information ratio is always higher than the Sharpe ratio
C
The Sharpe ratio uses tracking error in the denominator while the information ratio uses standard deviation
D
Both ratios measure the same concept but over different time periods
Select an answer to continue
Tags
#sharpe-ratio
#information-ratio
#performance-measurement
More Equity Investments questions
Start full Level III quiz
CFA Level III — Equity Investments Practice Question | AcadiFi | AcadiFi