Question 5.C Indexing strategies: Full replication, Stratified sampling, and optimization Explain each along with the CONDITIONS under which each would be appropriate and provide one disadvantage: MY answer for stratified sampling: Explain: Underlying securities are separated into “cells” based on risk factors and securities are then samples from each cell in the proper weights. Conditions: 1. High number of securities 2. less liquid underlying securities Disadvantage: Higher management fees as compared to full replication SCHWESER’S answer: Select sample based on cap, value or growth, etc. Use when cost is important and some tracking error is OK. ************************************************* My answer is like straight from THEIR book! SS 11 p. 17. Would I really not get any credit on this (especially on the conditions)? Also, their answers don’t ever even mention the disadvantages. What the hell?
i know how u feel. mtv! i am more concerned about the cfai grading than schweser. am not sure how strict/generous/objective the graders will be on the real exam?
C’mon regulars, help me out here.
i don’t have the capacity to understand your post right now 
I put the same thing. CFAI would give that full marks. It’s just schweser…
ng30 Wrote: ------------------------------------------------------- > i don’t have the capacity to understand your post > right now Are you drunk?
Also, the question doesn’t describe the portfolio as an equity portfolio, so I don’t know why they start talking about value and growth.
Bond Supply Wrote: ------------------------------------------------------- > Also, the question doesn’t describe the portfolio > as an equity portfolio, so I don’t know why they > start talking about value and growth. I had this same thought too.
mwvt9 Wrote: ------------------------------------------------------- > ng30 Wrote: > -------------------------------------------------- > ----- > > i don’t have the capacity to understand your > post > > right now > > Are you drunk? Haha no. Well drunk in knowledge after 13 hours today. So do you know thAt game 1 of the finals is the night before the test? U will be there for sure.