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4 June, 19:40

You are comparing three securities and discover they all have identical Treynor ratios. Given this information, which one of the following must be true regarding these three securities?

A. They have identical betas.

B. They have the same rates of return.

C. They earn identical rewards per unit of total risk.

D. They earn identical rewards per unit of systematic risk.

E. They have identical Sharpe ratios also.

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  1. 4 June, 20:00
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    Answer: The correct answer is "D. They earn identical rewards per unit of systematic risk.".

    Explanation: If you are comparing 3 values and by calculating, find that they all have the same Treynor ratio means that they earn identical rewards per unit of systematic risk.
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