hi, i am doing the CFA institue official site practice questions(economics). i got this question, and tried to figure out the answer based be comparing the sharp ratio of the industries. but the answer confused me. can anybody help to explain? thank you!
omfg CFA institute secretly added 788 new questions without saying it. i previously finished all the questions available but don’t remember this one…that’s why.
I approached the question the same way you did and was equally confused by the answer.
Because you need to use the Singer-Terhaar approach to calculate the required return for each industry and select the one with the highest return as high required returns translate to low values and hence attractive.