- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 45. Analysis of Active Portfolio Management
- Subject 3. The Fundamental Law of Active Management
CFA Practice Question
Based on the fundamental law of active management, if a portfolio manager has a transfer coefficient of 0.7, an information coefficient of 0.2, a breadth of 12, and an active risk 7%, what is the information ratio?
A. 0.49
B. 0.98
C. 1.68
Explanation: IR = IC x TC x BR1/2 = 0.2 x 0.7 x 121/2 = 0.49
User Contributed Comments 1
| User | Comment |
|---|---|
| jordy | Why not x active risk ? |