Which Metric Measures How Volatile a Fund's Returns Are Relative

question 59

Multiple Choice

Which metric measures how volatile a fund's returns are relative to its benchmark?

• A)Jensen's alpha
• B)information ratio
• C)Tracking error
• D)Sharpe ratio
• E)Treynor ratio

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Definitions:

Diminishing Marginal Utility

The economic principle stating that as a person increases consumption of a product, there is a decline in the additional satisfaction or utility that person derives from consuming one more unit of the product.

Increasing Opportunity Costs

The principle that the cost of forgoing the next best alternative increases as one allocates more resources to a certain activity.

Value Losses

Decreases in the worth or market value of an asset over time.

Cash Gift-Giving

The practice of giving money as a present to friends or family members on special occasions or celebrations.