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Learning Outcome Statements PDF Download
|1. Active Management and Value Added|
describe how value added by active management is measured;
|2. Comparing Risk and Return|
calculate and interpret the information ratio (ex post and ex ante) and contrast it to the Sharpe ratio;
|3. The Fundamental Law of Active Management|
describe and interpret the fundamental law of active portfolio management including its component terms - transfer coefficient, information coefficient, breadth, and active risk (aggressiveness);
|4. Applications of the Fundamental Law|
explain how the information ratio may be useful in investment manager selection and choosing the level of active portfolio risk;
compare active management strategies, including market timing and security selection, and evaluate strategy changes in terms of the fundamental law of active management;
|5. Practical Limitations|
describe the practical strengths and limitations of the fundamental law of active management.