- 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
You have five individual securities to choose from to construct your portfolio. Their active returns are uncorrelated with each other. You can rebalance your portfolio twice a year. What is the breadth of your forecasts?
B. 10
C. 25
A. 5
B. 10
C. 25
Correct Answer: B
The breadth is the number of independent decisions made per year by an investor in constructing his/her portfolio. In this case, 2 x 5 = 10.
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