CFA Practice Question

There are 136 practice questions for this study session.

CFA Practice Question

Assume the active risk of a fund is 4% and its active return is 6%. If you combine the fund in a 75/25 mix with the benchmark portfolio, the information ratio of the combined portfolio will be ______.
A. 1.5
B. 1.125
C. 2
Explanation: Both the active return and active risk will be reduced by 1/3, leaving the information ratio unchanged: 6%/4% = 1.5.

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