R30 - EOC question 23 - Implementation shortfall

Hi guys,

question 23 reading 30 is really confusing for me. Is the implementation shortfall not suppose to account for the cost of missed trades as well? Even more, for the trades executed, is the initial mid (or closing, or limit price) not suppose to be the benchmark price for the calculation of the implementation shortfall?!?!

Thank you!

Here we are using the short cut method to calculate IS. We are not asked to calculate the components of IS…So calculate the paper portfolio and then difference between actual and paper- that’s your IS. Also, there is no bid-ask here so no mid-value as in the case of EOC # 10.

Hope that helps.