Asset classes Q46 CFAI 2015 pm

[pokhim]

The question ask which asset class is misspecified… i.e. which doesnt meet the criteria.

1. Large Cap
2. Mid Cap
3. Small Cap
4. Agri Commodities
5. All Commodities
6. Muni Bonds

Is it 2,5 or 6?
The answer is 2 as it is not mutually exclusive to large and small cap. But I would have thought it was 5, given an All Commodities includes Agri commodities……..
Can you shed any light on why the answer is 2?

 

[FrankCFA]

Q45?
But the correlation between all commodities index and Agricultural Commodities Index is low (0.55)
Mid Cap correlation with Large/Small cap is very high 0.99/0.98.
So I choose mid cap..

 

[pokhim]

FrankCFA wrote:
Q45?
But the correlation between all commodities index and Agricultural Commodities Index is low (0.55)
Mid Cap correlation with Large/Small cap is very high 0.99/0.98.
So I choose mid cap..

ok, thanks…Makes sense when you look at the table!!