Q.1 Answer the following:

a)

The fundamental law of active management

(only one possible answer)

assumes active management will always outperform passive management.

can only be applied to equity portfolio management.

is a tool to determine portfolio weights.

is a tool to compute trading signals for individual stocks.

is a model to analyze determinants of outperformance.

b) To achieve a high transfer coefficient, equity managers need to increase

(only one possible answer)

the turnover rate.

the number of single stocks in the portfolio.

their implementation efficiency.

their assets under management.

the number of brokers they work with.

c) Equity factors...

(only one possible answer)

are not accessible by buying ETFs.

aim to avoid risk premia.

are usually constructed by weighting single stocks according to specific features.

aim to achieve high correlation to the market index.

are usually constructed using market timing signals.