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

Question

Quizplus · Accepted Answer

Tracking error measures the deviation of a fund's returns from its benchmark. Therefore, it is the most appropriate metric for measuring volatility relative to the benchmark. Jensen's alpha, information ratio, Sharpe ratio, and Treynor ratio are all measures of risk-adjusted returns or portfolio performance.

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