Problem #4 (Treynor measure): Sam is concerned about risk and is reading an article on the Treynor measure.

1. In 3-5 sentences, explain why the Treynor measure is important.

2. Here is a snapshot of Sams portfolio and the S&P 500 index. Calculate the Treynor

   measure for Sam.

3. Sam wants to compare his portfolios Treynor ratio to the market portfolio. Calculate the

   Treynor measure for the market portfolio.

4. In 3-5 sentences, analyze Sams risk in comparison to the market.

Sams Portfolio return	20%
Beta for Sams portfolio	1.30
Std deviation for Sams portfolio	8%
Risk-free rate	2%
Return on the S&P 500 portfolio	11%
Std deviation of the S&P 500 portfolio