Suppose Charles and David believe that the stock market in Australia is efficient. Each of them has formed a portfolio in order to replicate the ASX200 index. Over the past 8 months, the monthly returns to their portfolios and the index returns are shown in the table below:

Month	Charles	David	ASX200
1	2.30%	2.50%	2.70%
2	-3.60%	-4.00%	-4.60%
3	11.20%	10.20%	10.10%
4	1.50%	1.30%	2.20%
5	1.20%	0.80%	0.40%
6	3.20%	3.60%	2.80%
7	7.90%	8.40%	8.10%
8	-0.80%	-0.90%	-0.60%

1. Did they adopt passive or active strategies? Explain your answer. (1 mark)
2. The average monthly return differential that Charles has produced relative to the ASX200 index is _______%. It is _______ (Charles or David) who has outperformed the market. (2 marks)
3. _____ (Charles or David) is more successful in terms of tracking the ASX200 index and his annualized tracking error is ______%. (2 marks)