- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 38. Analysis of Active Portfolio Management
- Subject 4. Applications of the Fundamental Law
CFA Practice Question
Here is information about an equity fund:
B. remain the same.
C. increase, but not as much as by 100%.
If active risk is increased to 6%, the expected return will ______
A. double, leaving the information ratio to be the same.
B. remain the same.
C. increase, but not as much as by 100%.
Correct Answer: C
The transfer coefficient is 0.6. This is a constrained portfolio. The expected active return will increase but not proportionally by 100%.
User Contributed Comments 1
User | Comment |
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davidt87 | TC = 1 is perfectly unconstrained |