Schweser vol2 1am qu 10A

I noticed that this calculated the information ratio for an index using investor breadth as simply the total number of stocks. In this case, for S&P 500, it used investor breadth of 500. Is this correct? I had understood that just indexing using full replication would have a low investor breadth as it is only making one independant investment decision.

Breadth is based on the number of positions. Information coefficient is how ell you know those position.

According to Schweser text they say it relates to the number of ‘independent decisions’ and give the example of investing in 10 energy stocks as having an investor breadth of ‘1’ not ‘10’. Therefore, investing in the S&P i would have thought would also have a breadth of 1??


I admire you all who have the nerves to do Schweser AM sessions. Before I never bought Schweser notes or these Book 6 & 7. And I had less of stomach aches before exams.