Please choose from the following options and give a brief explanation: 2 (A) Fund X has higher tracking error. (B) Fund Y has higher tracking error. (C) There isnt sufficient information provided.

3. Below are the returns of funds X and Y, together with the returns of their bench- mark indices. You should be able to answer this question by eyeballing the numbers, but you should feel free to do calculations too. Year Fund X X's benchmark 1999 35.7% 36.6% 2000 2.9% 2.6% 2001 -36.1% -35.8% 2002 0.1% 2.1% 2003 41.3% 42.3% 2004 -20.4% -19.4% 2005 -52.8% -52.1% 2006 20.1% 18.4% 2007 20.7% 22.2% 2008 51.6% 50.3% 2009 -5.4% -5.4% 2010 1.1% 2.4% 2011 -1.0% -0.9% 2012 7.6% 7.8% 2013 -48.0% -48.4% 2014 -21.0% -22.1% 2015 -3.1% -2.0% 2016 13.3% 12.1% 2017 -40.6% -41.5% 2018 76.1% 76.1% 2019 21.6% 22.5% Fund Y Y's benchmark 1.6% 5.9% 4.0% 0.2% 5.0% 4.3% 10.5% 7.5% 4.7% 3.7% -8.7% 2.1% 3.3% 8.8% 7.1% 3.5% 1.4% 1.1% -5.2% 3.8% -10.7% -1.0% -1.8% -0.6% 10.4% 3.6% 3.7% 3.3% 4.6% 4.0% 2.3% 3.6% 2.6% 3.3% 5.5% 3.2% 1.9% 4.6% 4.2% 1.7% 3.8% -0.9% Please choose from the following options and give a brief explanation: 2 3. Below are the returns of funds X and Y, together with the returns of their bench- mark indices. You should be able to answer this question by eyeballing the numbers, but you should feel free to do calculations too. Year Fund X X's benchmark 1999 35.7% 36.6% 2000 2.9% 2.6% 2001 -36.1% -35.8% 2002 0.1% 2.1% 2003 41.3% 42.3% 2004 -20.4% -19.4% 2005 -52.8% -52.1% 2006 20.1% 18.4% 2007 20.7% 22.2% 2008 51.6% 50.3% 2009 -5.4% -5.4% 2010 1.1% 2.4% 2011 -1.0% -0.9% 2012 7.6% 7.8% 2013 -48.0% -48.4% 2014 -21.0% -22.1% 2015 -3.1% -2.0% 2016 13.3% 12.1% 2017 -40.6% -41.5% 2018 76.1% 76.1% 2019 21.6% 22.5% Fund Y Y's benchmark 1.6% 5.9% 4.0% 0.2% 5.0% 4.3% 10.5% 7.5% 4.7% 3.7% -8.7% 2.1% 3.3% 8.8% 7.1% 3.5% 1.4% 1.1% -5.2% 3.8% -10.7% -1.0% -1.8% -0.6% 10.4% 3.6% 3.7% 3.3% 4.6% 4.0% 2.3% 3.6% 2.6% 3.3% 5.5% 3.2% 1.9% 4.6% 4.2% 1.7% 3.8% -0.9% Please choose from the following options and give a brief explanation: 2