PM: Analysis of Active Portfolio Management

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Last updated 4:01 PM on 6/24/26
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10 Terms

1
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What is the objective of active management?

Beat benchmark returns

2
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What’s the value added active return?

Returnactive = Returnportfolio - Returnbenchmark

3
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What’s the alpha: risk-adjusted value added active return?

Alphaactive = Returnportfolio - (BetaportfolioReturnbenchmark)

4
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Value add is also known as?

Alpha

5
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What’s active weight?

Weightportfolio - Weightbenchmark

6
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What’s active returns?

Returns - Benchmarkreturn

7
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What is the impact on the Sharpe Ratio by adding cash or leverage?

Sharpe Ratio is unaffected

8
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What’s another name for the market portfolio?

Optimal risky portfolio

9
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What is the intersection of the CAL and Efficient Frontier?

Optimal Risky Portfolio/ Market portfolio

10
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What’s the difference between ex ante and ex post?

ex ante means measure with expected results/returns, while as ex post means actual results/returns