- CFA Exams
- 2025 Level II
- Topic 9. Portfolio Management
- Learning Module 38. Analysis of Active Portfolio Management
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Learning Outcome Statements PDF Download
| 1. Active Management and Value Added calculate and interpret the information ratio (ex post and ex ante) and contrast it to the Sharpe ratio; | |
| 2. Comparing Risk and Return describe and interpret the fundamental law of active portfolio management including its component terms - transfer coefficient, information coefficient, breadth, and active risk (aggressiveness); | |
| 3. The Fundamental Law of Active Management explain how the information ratio may be useful in investment manager selection and choosing the level of active portfolio risk; compare active management strategies, including market timing and security selection, and evaluate strategy changes in terms of the fundamental law of active management; | |
| 4. Applications of the Fundamental Law describe the practical strengths and limitations of the fundamental law of active management. | |
| 5. Practical Limitations describe arbitrage pricing theory (APT), including its underlying assumptions and its relation to multifactor models; define arbitrage opportunity and determine whether an arbitrage opportunity exists; calculate the expected return on an asset given an asset's factor sensitivities and the factor risk premiums; |
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