CFA Practice Question

There are 136 practice questions for this study session.

CFA Practice Question

Based on the fundamental law of active management, if a portfolio manager has an information ratio of 0.6, an information coefficient of 0.2, and a breadth of 10, what is his or her transfer coefficient?

A. 0.3
B. 0.55
C. 0.95
Correct Answer: C

IR = IC x TC x BR1/2
0.6 = 0.2 x TC x 101/2
TC = 0.95

User Contributed Comments 1

User Comment
davidt87 As the notes says: E(Ra) = IC x TC x sqrt(BR)
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