# 2009 MOCK

Q 23 and 24- I do not understand the calc- can anybody help?

23: active risk: they give you the individual active returns. you just square them, then sum, then take the root of the total. active return: weighted average where each active return is actual return - benchmark return. (remember that misfit return is acturn return - normal return 24: (total risk ^2 - misfit risk^2) ^.5 total risk^2 = misfit risk^2 + real risk ^2

remember total return = true return + misfit return, same for risk. I also stumbled on it … just to clarify, true return should be manager return - normal benchmark return, and misfit return = normal benchmark return - investor benchmark return

gregorynep Wrote: ------------------------------------------------------- > 23: > active risk: they give you the individual active > returns. you just square them, then sum, then > take the root of the total. > > active return: weighted average where each active > return is actual return - benchmark return. > (remember that misfit return is acturn return - > normal return > I thought actual return-normal return is true active return > 24: (total risk ^2 - misfit risk^2 > > total risk^2 = misfit risk^2 + real risk ^2

Bumping this up. Q23 2009 mock

I understand the true active risk side, but I’m not getting the calc on active return. To me it is manager return less normal benchmark return. The answer key uses manager return less investor benchmark return. Why so?

Reference the topmost p259 in book 4.

thanks.

question 23 was erratad… just making sure everyone knows:

http://www.scribd.com/doc/84027384/Cfa-2009-Level-3-Exam-Mock-Pm-Errata