- CFA Exams
- CFA Level I Exam
- Study Session 17. Portfolio Management (2)
- Reading 47. Analysis of Active Portfolio Management
- Subject 1. Active Management and Value Added
CFA Practice Question
Which statement is false?
A. Value added is a relative performance comparison to investing in a market portfolio.
B. The fundamental law of active management implies that, given some skill and the assumption of independent and uncorrelated active returns, an active manager should bet as often as possible.
C. The active risk of a market index fund is typically very low.
Explanation: A is false. The benchmark portfolio is not necessarily the market portfolio.
C: A market index fund's performance should be similar to that of a benchmark'?s.
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