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Past exam question Apr 2016, q 3

B

Benjamin

Member
Why does the solution here in ASET and examiners' report award points for proposing that fund A is active and fund B is passive? The question explicitly states that Fund A is active and Fund B is passive.

Also, and I know this is a grey-area question but would marks be awarded for things like that if both funds underperformed the benchmark, is the benchmark appropriate or perhaps too high? It's never clear what to award marks for when self-testing.
 
I'm not sure that marks are awarded in the examiner's report (or ASET) for simply restating that the funds are active/passive. Rather marks are awarded for explaining what these terms mean. There is some discussion of the difficulties in choosing an appropriate benchmark/index to track.
 
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