What Conditional VaR (CVaR) improves — measures expected loss beyond the VaR threshold

What Modern Portfolio Theory says — diversification reduces risk without reducing expected return

MPT asserts that diversification lowers unsystematic risk while maintaining expected return

What the Sharpe ratio measures — excess return per unit of risk: (R - Rf) / σ

Sharpe ratio: Excess return per standard deviation of portfolio returns

What the Markowitz mean-variance optimization does — finds the portfolio with minimum variance for a given return

Determines optimal asset allocation for desired return with minimal portfolio risk

What the Sortino ratio improves over Sharpe — only penalizes downside volatility

Sortino ratio focuses on downside deviation, unlike Sharpe ratio

What the Sharpe ratio's limitation is — it penalizes upside volatility as much as downside

Sharpe ratio doesn't differentiate between positive and negative volatility impacts on returns

What the Greeks portfolio risk measures together — Delta (direction), Gamma (convexity), Theta (time), Vega (volatility), Rho (rates)

Greeks combine to assess portfolio sensitivity: Delta, Gamma, Theta, Vega, Rho