1.Which type of making an index fund buys every single security in the benchmark at exactly the...
Question:
1.Which type of making an index fund buys every single security in the benchmark at exactly the weights in the benchmark?
synthetic tracking
sampling
replication
factor modeling
2.Use the table below showing the return of a portfolio and it's target benchmark for the past 8 quarters.What is the tracking error of the portfolio?What type of manager would you say this manager is based on the level of the tracking error?
Quarter rP rI
1 5.25% 5.00%
2 7.80% 8.00%
3 11.25% 12.00%
4 1.50% 2.00%
5 14.25% 15.00%
6 10.50% 10.00%
7 2.50% 3.00%
8 7.70% 8.00%
1.25%; structured
3.5%; active
0.52%; passive
0.91%; passive
3.Which low cost, prepackaged route to investing in an index would you choose?Why?
ETFs; high cost but good diversification
ETFs; diversification at a low cost
there is no low cost prepackaged index
actively managed funds; very low tracking error