ABSTRACT
This analogy may be useful. Consider automobiles for a moment. The mileage range of a car on a single tank of gas can be compared to the returns of a manager. The “market line” for this analogy would plot the mileage range on the vertical axis and the gallons, or cost, on the horizontal axis. The milesper-gallon figure puts two cars on a comparable basis and allows you to determine which car is a better value. The reward-to-risk ratio is nothing more than miles-per-gallon in the car analogy.
