The Layton Growth Fund has an alpha of 1.8 percent. You have determined that Lay
ID: 2769571 • Letter: T
Question
The Layton Growth Fund has an alpha of 1.8 percent. You have determined that Layton’s information ratio is .25. What must Layton’s tracking error be relative to its benchmark? (Enter your answer as a percent rounded to 1 decimal place. Omit the "%" sign in your response.)
The Layton Growth Fund has an alpha of 1.8 percent. You have determined that Layton’s information ratio is .25. What must Layton’s tracking error be relative to its benchmark? (Enter your answer as a percent rounded to 1 decimal place. Omit the "%" sign in your response.)
Explanation / Answer
information ratio = alpha/tracking error ie0.25= 1.8%/TE So TE = 0.45%