a. Compute the tracking error from the following information:

b. Would the tracking error computed in part a be a backward-looking or forward-looking tracking error?

c. Compare the tracking error found in part a to the tracking error found for Portfolios X and Y in Exhibits 23-1 and 23-2 . What can you say about the investment management strategy pursued by this portfolio manager?

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Portfolio A's Benchmark Month Return (%) Index Return (%) Jan 2.15 1.65 Feb 0.89 -0.10 March 1.15 0.52 April -0.47 -0.60 May 1.71 0.65 June 0.10 0.33 July 1.04 2.31 Aug 2.70 1.10 Sept 0.66 1.23 Oct 2.15 2.02 Nov -1.38 -0.61 Dec -0.59 -1.20