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NEW QUESTION: 1
Lucy Sakata, CFA and Gary Lowenstein, CFA are portfolio managers for the Murray Funds, a provider of investment funds to institutional and wealthy individual investors. Murray frequently indexes in developed markets, but uses full blown active management in less efficient markets and when they think their analysts have a particular expertise. The vast majority of Murray's clients attempt to minimize tracking error.
One of the Murray's funds invests in a Hong Kong index and is marketed as a way for investors to participate in the growth of the Asian economies. The index represents the best known Hong Kong stocks and Murray uses a full replication strategy for the fund. The index is a market cap-weighted index and ten firms represent over 70% of the index's total market cap_Sakata would like to market the Hong Kong fund to institutions with a required minimum investment of $50 million. Many potential clients are institutions who outsource their foreign equity management and are subject to maximum holdings on individual stocks.
Murray also has a Canada fund that invests in an index which represents the 25 largest cap stocks in Canada. It is marketed as a way for investors to exploit the growth in demand for commodities. The index adjusts for stock splits and repurchases as necessary. Most of the index's return has come from capital gains, rather than dividends, due to the tremendous increase in global demand for commodities. To encourage long-term holding, Murray places a back-end load of 3% on fund redemptions that are made within two years of initial investment.
Sakata and Lowenstein discuss the fundamental law of active management and how it applies to three hypothetical managers who invest against the broad large-cap U.S. market, as represented by the S&P
500 index.
* Manager A under-weights and over-weights the 500 individual stocks of the S&P 500 index as she sees appropriate, keeping industry exposures similar to those of the index. She has an information coefficient of
0.05 and is restricted to long-only positions.
* Manager B holds cash and long S&P 500 futures. He tries to generate excess returns by altering the duration of the cash position and has an information coefficient of 0.05.
* Manager C has an information coefficient of 0.07, and she uses a long-short strategy for the 500 stocks in the S&P 500 index.
Sakata is consulting with the trustees of the Powell Foundation. The foundation has a position in the three Murray funds described in Exhibit 1 below.
Exhibit 1: Powell Foundation Holdings

Murray has a value fund that invests in stocks in the U.S. Lowenstein is considering several equity style index providers as a benchmark for the fund. The characteristics of the index providers and the methodologies they use to construct equity style indices are described in Exhibit 2 below.
Exhibit 2: Comparison of Index Providers

In regard to the index providers, Lowenstein makes the following statements:
Statement 1: "I would like to use the indices from either provider in a returns-based style analysis. Based on the information in the table, I believe that if I regress a value manager's returns against Provider B's indices, the manager's selection return will appear artificially large." Statement 2: "If an index provider uses buffering rules, a fund tracking that index will experience lower transactions costs." Determine which of the three managers will most likely have the highest information ratio.
A. Manager C.
B. Manager A.
C. Manager B.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
The fundamental law of active management states that an investors information ratio is a function of her depth of knowledge (the investor's information coefficient) and the number of independent investment decisions (the investors breadth).
Professor's Note: Think of the information coefficient as the correlation between the managers forecasted and actual returns.
The derivatives-based enhanced indexing strategy of Manager B will have less breadth than the (stock- based) enhanced strategies of Managers A and C Note that Manager B has the same information coefficient as Manager A, so Manager A should have a higher information ratio than Manager B.
Manager C uses a long-short strategy, which attempts to exploit the short selling constraints faced by many managers. The long-only strategy of Manager A can only earn a long alpha, but both managers actively follow and analyze 500 stocks. This means their breadth is the same. Due to a higher information coefficient than Manager B, Manager C will have a higher information ratio, so C has the highest ratio among the three managers. (Study Session 11, LOS 33m and p)

NEW QUESTION: 2
Which resource containers can an administrator arrange in a hierarchy so that one container may include other containers?
A. Organizational views and groups
B. Resource filters
C. Policies and tasks
D. Resource targets
Answer: A

NEW QUESTION: 3
In a DCO session, which role is typically responsible for deriving test cases from the requirements?
A. Business Architect
B. System Architect
C. Moderator
D. QA Representative
E. Process Owner
Answer: A
Explanation:
(http://www.floridajobs.org/PDG/ITProject/PegaResponseFINAL.pdf)

NEW QUESTION: 4
Refer to the exhibit.

Which three statements about MPLS LDP operations are true?
A. The outgoing label of 22 for 10.2.10.1/32 is learned from the 192.168.112.40 LDP neighbor.
B. The incoming label for 10.2.10.1/32 is 16010 (which is allocated by the local router), and the outgoing label is 22 (as advertised by the next-hop router).
C. The ImpNull outgoing label for the 192.168.102.0/24 network means that the outgoing label should be removed when sending packets to the 192.168.112.40 next-hop router, when the incoming label is
16003.
D. The Unlabeled outgoing label for 10.10.10.100/32 indicates that a label pop is required when sending packets to the 10.10.10.1 next-hop router.
E. The ImpNull outgoing label for the 192.168.102.0/24 network means that the local router has not received a label for that network from its neighbor.
F. The 16003 and 16010 labels are learned from the 192.168.112.40 LDP neighbor.
Answer: A,B,C
Explanation:
Explanation/Reference:
Explanation:
Explanation/Reference:
http://www.cisco.com/en/US/docs/ios/12_2t/12_2t2/feature/guide/ldp_221t.html