Tracking Error means Active Return or Active Risk? return, exactly, calling, solution, computing

cfa10yrplan

Perhaps the curriculum is fuzzy or maybe my head is fogged up...

"Tracking Error" means what exactly-- "Active Return" or "Active Risk"?

I thought Tracking error is (Portfolio - Bmk) return, but Reading 47 EOC # 8, is calling Std. dev. of (Portfolio - Bmk) return as "Tracking Error", I thought the name for that is "tracking risk".

Also as a side-bar, in thise EOC solution, computing std. dev. from 5 observations seems statistically poor, right?



Edited 1 time(s). Last edit at Tuesday, May 17, 2011 at 10:13PM by jbaphna.