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

question 95

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:

Watson

John B. Watson, an American psychologist who established the psychological school of behaviorism.

Cognitive Theory

A psychological approach that emphasizes mental processes such as perception, memory, and problem-solving as central to understanding behavior.

Information-Processing Approach

The information-processing approach is a cognitive framework that examines how humans encode, process, store, and retrieve information, similar to the operations of a computer.

Passive Participant

Refers to an individual engaging in an activity or experiment with minimal involvement or without actively influencing the outcome or process.