i think there was a question in a cfai mock where you had to calculate the IR ratio by dividing the alpha of a stock by the UNSYSTEMATIC risk. any idea why? i thought it would be alpha divided by (total risk stock - total risk benchmark) but it wasnt…
well if the benchmark is the market that means that total risk of benchmark is systematic risk which leaves the unsistematic risk
mike0021 Wrote: ------------------------------------------------------- > i think there was a question in a cfai mock where > you had to calculate the IR ratio by dividing the > alpha of a stock by the UNSYSTEMATIC risk. any > idea why? i thought it would be alpha divided by > (total risk stock - total risk benchmark) but it > wasnt… That was book 6 3pm. I tried to re-gurge the formula and then spent 5 frustrating minutes trying to figure why port alpha / (total port sd - index sd) wasn’t a choice. port unsystematic sd was a given in the damn vig. as noted active risk is the unsystematic risk = sd(port ret - index ret) not (port sd - index sd) …another 8 sec plug n chug question that becomes 5 minutes of hell if you can’t recall those seven words from the text.
disptra Wrote: ------------------------------------------------------- > Yes. If you look at CFAI, there are some stuff > like FMCAR. Just try to start memorizing those. > It feel like important thing. What’s FMCAR? I really don’t recall seeing this before… !
What is FMCAR?