
educationMay 8, 20263:42pending
[Series 65] 45, Sharpe Treynor and Jensen Performance Measures
About this episode
This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
In this episode you will learn:
- The Sharpe Ratio uses standard deviation to measure return per unit of total risk, making it ideal for non-diversified portfolios.
- The Treynor Ratio uses beta to measure return per unit of systematic risk, making it the correct choice for well-diversified portfolios.
- Jensen's Alpha is a measure of a manager's skill, calculating the excess return a portfolio earned above its expected return based on its beta.
- How the Series 65 exam tests these concepts conceptually, focusing on which measure is appropriate for a given scenario rather than complex calculations.
- A simple mnemonic to remember the key risk component for each performance measure: Sharpe for Standard Deviation, Treynor for Beta, and Jensen for Genius (Alpha).
For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
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