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 degree of deviation of a fund's returns from its benchmark. It is essentially a measure of volatility of a fund's returns relative to its benchmark. Options A, B, D, and E do not measure volatility or deviation from the benchmark.

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