cBook

roblem $11-08$

hown below are the investment weights for the securities held in four different portfolios: three mutual funds and the benchmark index that each of those funds uses.

Percentage Security Investment Weight:

a$.$ Calculate the active share $($AS$)$ measure for Fund X $,$ Fund V $,$ and Fund Z relative to the benchmark index. Do not round intermediate calculations. Round your

answers to one decimal place.

Fund $x$ :

$\%$

Fund $Y$ :

$\%$

Fund Z:

$\%$

b$.$ Using these AS calculations, indicate which fund is the most likely to be considered; $($i$)$ a passive index fund, $($ii$)$ a closet $($or enhanced$)$ index fund, and $($iii$)$ an

actively managed concentrated stock$-$picking fund. Explain the reason for your classification.

Fund $x$ is considered

index.

because, it

J in the investment weights of holdings relative to the benchmark

Fund $Y$ is considered

because, it is

$|$ concentrated than the benchmark and has

holdings and

investment positions.

Fund $Z$ is considered Select$-$

because its security holdings come closer to matching the benchmark;