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The information ratio is the ratio of the alpha of the portfolio to idiosyncratic risk of the portfolio (the standard deviation of the error term

The information ratio is the ratio of the alpha of the portfolio to idiosyncratic risk of the portfolio (the standard deviation of the error term of the return generating process). It is a good measure to use to evaluate actively managed portfolios, if the asset owner agrees to complement the passive portfolio management with a modest amount of active portfolio management to take advantage of capable active managers. Is the above statement true or false?

A. True B. False

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