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Treynor ratio differs from Sharpe ratio in that the denominator is:
AVariance instead of standard deviation (within the standard regulatory framework)
BTracking error instead of total risk
CBeta of the portfolio instead of standard deviation
DSkewness instead of total risk
Answer & Solution
Correct answer: C. Beta of the portfolio instead of standard deviation
1. Identify what the question asks: this concept maps to treynorratio (§11).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (C).
_Source: ICAI BoS CA Final Paper 2, Ch 6 "Portfolio Management"_
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