Question #6
Reading: Reading 40 Analysis of Active Portfolio Management
PDF File: Reading 40 Analysis of Active Portfolio Management.pdf
Page: 3
Status: Incorrect
Correct Answer: B
Your Answer: A
Question
Which of the following terms is the ex-ante risk weighted correlation between forecasted active returns and actual active returns?
Answer Choices:
A. Transfer Coefficient
B. Information Coefficient
C. Breadth
Explanation
Information coefficient is the ex-ante correlation between forecasted active returns and
actual active returns. It captures the skill of the manager.