To answer the multiple-choice questions, note down the answer on your answer page. You also need to offer a brief justification on your answer booklet for each one of your answers in this section. (minimum 100 words per question)

1. The Sharpe Index measures the

a. average return on a stock.

b. variability of stock returns per unit of return

c. stock's beta adjusted for risk.

d. excess return above the risk-free rate per unit of risk.