Given a portfolio return of 5%,10%,-2% and 4%,and a tracking portfolio of 6%,7%,2% and 5%,calculate the average absolute tracking performance of the portfolio.

A) $ 0.0005 $
B) $ 0.0066 $
C) $ 0.0125 $
D) $ 0.0258 $

Question

Given a portfolio return of 5%,10%,-2% and 4%,and a tracking portfolio of 6%,7%,2% and 5%,calculate the average absolute tracking performance of the portfolio.

A) $ 0.0005 $
B) $ 0.0066 $
C) $ 0.0125 $
D) $ 0.0258 $

Quizplus · Accepted Answer

The tracking error for each period is calculated as the return on the tracking portfolio less the return on the portfolio being tracked.The errors are therefore: 0.01,-0.03,0.00 and 0.01.Averaging these values and taking the absolute value gives the average tracking error for the portfolio,which is 0.0125.

Given a Portfolio Return of 5%,10%,-2% and 4%,and a Tracking 0.0005 0.0005 0.0005

Given a Portfolio Return of 5%,10%,-2% and 4%,and a Tracking $0.0005$