 # Treynor measure using percentage points and not decimals ?

From 2015 PM, Q 53 : they calculate Treynor this way :

R = 15%, Rf= 4%, and Beta = 1.35,

So Treynor according to the Exam answer = (15-4)/1.35 = 8.15

But shouldn’t it be (0.15-0.04)/1.35 = 0.0815 ?

In the Sharpe ratio obviously it doesn’t matter which way you do it, but in Treynor you divide by Beta so it does matter.

What do you guys think ?

if you calculate all the other treynor measures that way with the companies you are comparing, it doesnt matter. it just multiples the ratio by a factor of 100.

Correct.

However, if the exam asks you to calculate one in the AM on a stand-alone basis…

But whatever, I agree that you will usually have hints on the method that they want.

I got the 2015 PM Mock Treynor question wrong because of that, but in hindsight I could have guessed by comparing the size of the possible answers to what I had calculated.

yea for AM thats a fair concern. i will personally calculate them using the decimal form…