Reading 33: Equity Portfolio Management- LOS p(part2)～ Q control, manager, stocks, 300

wzaina

 

LOS p, (Part 2): Justify enhanced indexing on the basis of risk control and the information ratio.

Q1. Manager X follows the stocks in a broad market index and has made independent forecasts for 300 of them. Her information coefficient is 0.03. Manager Y has made independent forecasts for 100 stocks. His information coefficient is 0.05. Which manager has the better performance and why?

A)   Manager X because she has greater breadth.

B)   Manager Y because he has more accurate forecasts.

C)   Manager Y because he has greater breadth.

 

Q2. Manager X follows the stocks in a broad market index and has made independent forecasts for 500 of them. Her information coefficient is 0.02. Manager Y has made independent forecasts for 175 stocks. His information coefficient is 0.04. Which manager has the better performance and why?

A)   Manager Y because he has more accurate forecasts.

B)   Manager Y because he has greater breadth.

C)   Manager X because she has greater breadth.

 

 

rawrdinosaur

ty

luqian55

thank you

suodi

[em50]

deqiang

thanks.

maxsimax

tq

祈愿修神

B

aleckkwong

A

lenny_chen

x

思霖

Thx!