- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 38. Analysis of Active Portfolio Management
- Subject 5. Practical Limitations
CFA Practice Question
The actual information ratios, after uncertainty of skill is accounted for, are ______ predicted by an objective application of the original form of the fundamental law.
B. on average about the same as those
C. substantially higher than
A. substantially lower than
B. on average about the same as those
C. substantially higher than
Correct Answer: A
The higher the uncertainty about forecast ability, the smaller the expected value added is likely to be.
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