“To determine the fund’s excess return over several periods, we compound the fund’s single-period returns and compound the benchmark’s single-period returns. The difference between the two would be the total excess return attributable to active management.” correct or incorrect. Provide reasoning with your answer

seems correct. It’s the excess returns over single periods that you cannot compound, but total returns should get you there.

correct chi paul

This was asked earlier today. You could either compound or use that formula.

cfaboston28 Wrote: ------------------------------------------------------- > “To determine the fund’s excess return over > several periods, we compound the fund’s > single-period returns and compound the benchmark’s > single-period returns. The difference between the > two would be the total excess return attributable > to active management.” > > correct or incorrect. Provide reasoning with your > answer Nah, that’d be incorrect (I believe). I think that you have to use the returns in the first period (to active management) and then multiply that number by the benchmark return. I might not be 100% correct with that, but I’m pretty damn sure that you can’t do what cfaboston28 wrote above…almost positive, actually. You have to cross multiply the two, or something like that (1st period active by second period benchmark return, and vice versa). Full disclosure, attribution ain’t my strongest subject.

Chi Paul is correct. The answer is correct. It is from Schweser’s Mock. I got it wrong

cfaboston28 Wrote: ------------------------------------------------------- > Chi Paul is correct. The answer is correct. > > It is from Schweser’s Mock. I got it wrong Gotcha; the wording is a little funny as they talk about excess returns at first and then go on to describe total returns.