- CFA Exams
- CFA Level I Exam
- Study Session 17. Portfolio Management (2)
- Reading 47. Analysis of Active Portfolio Management
- Subject 3. The Fundamental Law of Active Management
CFA Practice Question
The value added through active management is a direct function of the correlation coefficient between the ______ and the ______.
II. realized active returns
III. forecasted active returns
I. active weights
II. realized active returns
III. forecasted active returns
A. I and II
B. II and III
C. I and III
Explanation: Value added = Sigma (active weightsi x realized active returnsAi)
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