- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 38. Analysis of Active Portfolio Management
- Subject 3. The Fundamental Law of Active Management
CFA Practice Question
TC = ______ represents a perfect correspondence between active weights taken and forecasted active returns.
B. 0.00
C. -1.00
A. 1.00
B. 0.00
C. -1.00
Correct Answer: A
TC can take on values anywhere from -1.00 to +1.00. TC = 1.00 allows the full expected value added to be reflected in the portfolio structure.
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