2025 CFA Level II Exam: Topic 9. Portfolio Management - Learning Module 38. Analysis of Active Portfolio Management

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	1. Active Management and Value Added describe how value added by active management is measured;
	2. Comparing Risk and Return calculate and interpret the information ratio (ex post and ex ante) and contrast it to the Sharpe ratio;
	3. The Fundamental Law of Active Management describe and interpret the fundamental law of active portfolio management including its component terms - transfer coefficient, information coefficient, breadth, and active risk (aggressiveness);
	4. Applications of the Fundamental Law explain how the information ratio may be useful in investment manager selection and choosing the level of active portfolio risk; compare active management strategies, including market timing and security selection, and evaluate strategy changes in terms of the fundamental law of active management;
	5. Practical Limitations describe the practical strengths and limitations of the fundamental law of active management.

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