Not able to understand the intution behind Mkt adj. implementation shortfall. My understanding: Facts:(schweser SS16 page 21) IS=0.42% Mkt movement = 0.8% (up),Stock beta= 1.2.So expected ret.= 0.96%. So a IS of 0.42% would imply a notional loss of 0.42%.Loss of not implementing the trading strategy soon as the trading decision was made. But if during trading period, mkts went up by 0.8% and stock beta is 1.2, it means an expected return of 0.96%. So far so good. Now i am not able to understand the concept behind subtracting expected ret. from IS ( 0.42-0.96=-0.54%). Only explanation i can think of is : Although stock was expected to move up by 0.96%, it will only gain 0.54% as there was a shortfall of 0.42%. Comments/suggestions please.
ignore plz.There is another thread going on this.Will move thr