CFAI AM mock Q#59 - Error in Key

Hello all,

The statement " tracking error is the standard deviation of active returns and can be decomposed into the total factor risk and the active specific risk" is inaccurate in my opinion. It should not be TOTAL factor risk and should be ACTIVE factor risk. Therefore 59 could be either A or C as both the description of tracking error and active return is incorrect.

Any comments?


I picked the same answer as yours. I also think it should be Active rather than Total factor risk.

Active risk ^ 2 = active factor risk + active specific risk