A 15% return sounds better than a 10% return — until you learn the 15% came from an investment that swung wildly, sometimes down 40% in a bad month, while the 10% came from something that moved steadily and predictably. The Sharpe ratio, developed by economist William F. Sharpe, exists specifically to make that comparison meaningful: it takes an investment's excess return (its return above the risk-free rate, like a…
You have read your 2 free lessons. Making an account is free and gives you 2 more straight away — plus your progress, streak and quiz scores saved as you go.
Learning through your school? Join your class — school students get everything, at no personal cost.