What is the key difference between the Sharpe Ratio and the Sortino Ratio? Option: The Sharpe Ratio considers only positive returns, while the Sortino Ratio considers both positive and negative returns, The Sortino Ratio focuses on downside risk, while the Sharpe Ratio considers both positive and negative returns in its risk assessment, The Sharpe Ratio accounts for downside risk, while the Sortino Ratio considers overall volatility, The Sortino Ratio uses a risk-free rate of return, while the Sharpe Ratio does not

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What is the key difference between the Sharpe Ratio and the Sortino Ratio?

The Sharpe Ratio considers only positive returns, while the Sortino Ratio considers both positive and negative returns

The Sortino Ratio focuses on downside risk, while the Sharpe Ratio considers both positive and negative returns in its risk assessment

The Sharpe Ratio accounts for downside risk, while the Sortino Ratio considers overall volatility

The Sortino Ratio uses a risk-free rate of return, while the Sharpe Ratio does not

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What does the Sortino Ratio primarily focus on in its risk assessment?

Positive returns exceeding the benchmark

Overall return volatility

Downside risk or negative returns

Consistency of returns over time

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What is the significance of the Sharpe Ratio in assessing mutual funds?

"It indicates the fund's average return over a 5-year period"

"It reflects the fund manager's experience and expertise"

"It determines the fund's risk-adjusted return, highlighting the return earned per unit of risk"

"It measures the fund's overall profitability, considering expenses"

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What does the Sharpe Ratio indicate in mutual fund evaluation?

Measure of risk-adjusted returns

Volatility of the fund's returns

Maximum potential loss on investment

Correlation between fund performance and market index

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What does a downside capture ratio of less than 100 indicate?

The fund performed worse than the benchmark during periods of negative returns

The fund consistently generated positive returns regardless of market conditions

The fund outperformed the benchmark during periods of negative returns

The fund perfectly mirrored the benchmark's performance during periods of negative returns

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What is the general principle stated regarding risk and returns?

None of the above

Both of the above

Lower the risk, lower the return

Higher the risk, higher the return