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Basic Question 1 of 14
Active return is equal to ______.
B. portfolio return - market portfolio return
C. portfolio return - benchmark return
D. active factor return + active specific return
A. market portfolio return - risk-free return
B. portfolio return - market portfolio return
C. portfolio return - benchmark return
D. active factor return + active specific return
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Edward Liu
Learning Outcome Statements
explain sources of active risk and interpret tracking risk and the information ratio;
describe uses of multifactor models and interpret the output of analyses based on multifactor models;
describe the potential benefits for investors in considering multiple risk dimensions when modeling asset returns.
CFA® 2025 Level II Curriculum, Volume 5, Module 40.