CFA Practice Question

There are 136 practice questions for this study session.

CFA Practice Question

Here is information about an equity fund:

If active risk is increased to 6%, the expected return will ______

A. double, leaving the information ratio to be the same.
B. remain the same.
C. increase, but not as much as by 100%.
Correct Answer: C

The transfer coefficient is 0.6. This is a constrained portfolio. The expected active return will increase but not proportionally by 100%.

User Contributed Comments 1

User Comment
davidt87 TC = 1 is perfectly unconstrained
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