Methods of risk-adjusted performance evaluation using mean-variance criteria came on stage simultaneously with the capital asset pricing model.

a) Describe and discuss following measures of performance evaluation

Treynor Index,

William Sharpe, how its related with CAL line

Michael Jensen , how it is related with CAPM

b) using the following table evaluate which is better than other using three different measure of performance evaluation.

Asset	E( R)%	beta
X	15	1.25
Y	11	1.0
Risk-free	3	0
Market index	11	1

c). you are currently holding a diversified portfolio and wish to select one of these assets which one do you consider.

d). if you wish hold only one of these assets which one do you think will be more desirable.

Answer rating: 100% (QA)

The Treynor Index is a measure of riskadjusted performance that uses the capital asset pricing model CAPM to evaluate the return of an investment port... View the full answer