Active portfolio managers try to construct a risky portfolio with __________.
A)a higher Sharpe measure than a passive strategy
B)a lower Sharpe measure than a passive strategy
C)the same Sharpe measure as a passive strategy
D)very few securities
E)none of the above

Question

Quizplus · Accepted Answer

Active portfolio managers aim to achieve higher returns than the market index by constructing a portfolio with a higher Sharpe measure than a passive strategy. They do this by investing in undervalued stocks or selling overvalued stocks, among other strategies. A higher Sharpe measure indicates a better risk-adjusted return, which is the primary objective of active portfolio management.

Active Portfolio Managers Try to Construct a Risky Portfolio with __________