I am stuck with the chapter on analysis of active PM , there are just so many formulas and the examples in the curriculum are so tricky . Currently stuck with fundamental law of active management . god dam ! can someone kindly explain that !?
I will quick read again entire topic in Schweser (i think is not longer than 70 pages) and expect to improve overall confidence. On L1, for me PM session was the easiest one. I cannot prove it on L2. It’s conceptual a quite harder. I recommend same, repeat once again whole session, then take EOCs and portal tests.
After banging my head against it for a long time, I took apart the triangle. I don’t think it’s really a triangle – it’s two bro’s working side-by-side. You’ve got Transfer Coefficient as the “muscle”, and Information Coefficient as the brains. It’s like Arnold Schwertenegger and Stephen Hawking. Hawking is trying to predict theoretical stuff – super smart, but totally useless unless brought into reality. That’s when Arnold gets involved. He does the heavy lifting – he shifts the weights around so Hawking’s bets have real substance to them, and a real payoff if they’re correct.
Risk and return dominates through topic and it’s really refreshment from valuation, a dominant thesis through entire Level 2 curriculum. Quants topic understanding helps to understand PM formulas and ratios.