1. Use the following table to answer questions below:

Portfolio	ABC	XYZ	Benchmark
Annual return	12%	10%	10%
Annualized risk	15%	8%	5%
Active risk	5%	3%
No Independent decisions	20	8
Transfer coefficient	0.80	0.60
Information Ratio	13.33%	0%
Information Coefficient	?	?
Factor exposure	ABC	XYZ
Market	1.08	0.84
Size	-0.15	0.25
Value	0.04	0.30
Momentum	0.15	-0.20
Quality	0.35	0.05

1. Discuss the fundamental law of active portfolio management. Calculate the information ratio and information coefficient for ABC and XYZ. How would you use these metrics to assess the quality of active management? Also compare and contrast information ratio and its usefulness to Sharpe ratio, Treynor ratio, and Jensens alpha (conceptually).

1. b. Discuss factor based portfolio performance analysis. Discuss factor exposures of each fund. What style each fund is pursuing and why? The intercept is not given but what is a desirable intercept and why?