Implementation Shortfall - 3 Variants

CFA Level III Portfolio Management
#1

Do I have these 3 variants of IS questions correct?

  1. IS = Paper profit - Actual profit. …no need to break down by delay,trading etc

  2. Expanded IS = delay + trading + opportunity cost + fees

  3. Market-Adjusted IS: same as Expanded IS but adding a “market-adjustment” of “-Beta x Index cost” to not be punitive for overall market movement

…And any time they ask for it in BPS, just divide those numbers by (Total # shares in order * Original Decision Price)

Appreciate your feedback

#2

It all looks good!

#3

yep