Question

Relative to the Sharpe ratio, the Sortino ratio will make a portfolio’s performance look more favorable if the portfolio has experienced: Group of answer choices fewer extreme negative returns relative to extreme positive returns. fewer extreme positive returns relative to extreme negative returns. an equal number of extreme positive and extreme negative returns. virtually no extreme negative or extreme positive returns.

Answer 1

fewer extreme negative returns relative to extreme positive returns.

Step-by-step explanation:

In simple words, The Sortino ratio relates to the variant of the Sharpe ratio which distinguishes negative variance against total combined variance by using the investment's confidence interval of unfavorable portfolio returns, named downside variance, rather than the total confidence interval of stock return.

The Sortino equation considers the return of a security or property and removes the default free percentage and then splits that quantity by the drawback variance of the relative asset.