Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the annual returns produced by two different active equity portfolio managers (A and B) as well as those to the stock index with which

image text in transcribed

Consider the annual returns produced by two different active equity portfolio managers (A and B) as well as those to the stock index with which they are both compared: Period 1 1 2 Manager A 13.2% -2.1 14.9 Manager B 13.7% -4.7 Index 11.7% -2.0 3 13.2 18.6 4 0.4 2.0 -0.6 5 -6.9 -3.0 -6.8 25.4 6 24.7 21.7 7 -12.2 - 13.3 -11.5 5.2 5.3 5.3 8 9 3.2 4.4 2.0 10 19.7 18.6 19.5 a. Did either manager outperform the index, based on the average annual return differential that he or she produced relative to the benchmark? Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to two decimal places. Manager A: % Manager B: % -Select- 's average return is less than the index and -Select- 's average exceeded that of the index. b. Calculate the tracking error for each manager relative to the index. Which manager did a better job of limiting his or her client's unsystematic risk exposure? Do not round intermediate calculations. Round your answers to two decimal places. Manager A: % Manager B: % did the better job of limiting the client's exposure to unsystematic risk as the difference between manager's returns and those of the index has a -Select- v standard -Select- deviation

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Brigham, Daves

10th Edition

978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573

More Books

Students also viewed these Finance questions

Question

identify the dynamics of resource development;

Answered: 1 week ago