Treynor ratio vs. SML

[lukstei]

Hey guys!

I have a question regarding CAPM and the Treynor ratio:

Treynor ratio = (R_p - R_f)/(beta_p)

But according to the Security Market Line the relationship between the expected portfolio return and beta is linear.

So am I correct with my assumption that the expected treynor ratio ex ante is always 1, and the treynor ratio is only used to compare how a portfolio did ex post, when the R_p is the actual outcome?

Thanks

 

[S2000magician]

Yes: Treynor is an ex-post measure.