Where is Performance measures used

Question

Where is Performance measures used?

Answer 1

Performance measures are used to find out how successful an investment strategy has been. While a hedge fund or trader is asked regarding past performance the first question is generally ‘‘what was your return?’’ Afterwards maybe ‘‘what was your worst month?’’ These both are very easy measures of performance. More sensible measures make allowance for the risk which has been taken, because a high return with low risk is too better than a high return with lots of risk.