Wont hurt if you know - II

Sharpe Ratio : A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio tells us whether the returns of a portfolio are due to smart investment decisions or a result of excess risk. (From Investopedia)

Big Mac Index : Simply put, it compares the price of McDonald's Big Mac in different countries and depending on the price finds out the respective comparison between any two currencies. Considering that McDonald's outlets operate in 119 countries, it can be considered a good measure of currency exchange rate based on the principle of purchasing power parity. (From Economist, they guys who came up with this index)

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