bolligerallstar

Question 106, Schweser Exam 3, Volume 1 is a quick calc of the information ratio.

However, I'm confused by the solution relative to what I understood the IR to be.

The given variables for a forecasted portfolio are:

Alpha: 5.33%
Beta: 1.35%
Total std dev, 40%
Unsys std dev, 30%

The question asks for a calculation of the IR given those inputs.

The solution has Alpha (being active return) over Unsys std dev - not the total std dev.

Anyone assist? The definitions I have for IR suggest it is active return over the deviation of active return - which I would have interpreted to be total std dev of the portfolio.

Unless... I've missed the boat entirely on this PM concept - and active return is entirely the product of unsystematic risk?