This will help you pass....

This is a great initiative Junior thanks. However, do you think that maybe the word ‘eliminate’ is the best choice? I almost picked B but changed my mind because I thought eliminate was too strong of a statement.
 
zina, i hear what you’re saying. the reason i put “eliminate” as opposed to something softer (and why i chose to use ”most likely”) is because, in my experience, this is the type of “tricky” question/verbiage the CFAI likes to use. A and C have no validity as correct answers, and they are not likely, and since there is a high likelihood misfit return can be “eliminated” by adding the Fund, B is “most likely” correct.
i promise not to throw CFAI-like tricks in the next one :)
 
Well I agree with Matt. Information ratio ia undetermined. But the word eliminate causes a hind sight bias to dominante the overconfidence. studying hard will compensate us with such tricks question.
 
Excellent points Junior and shame on me. Goes to show that no tricks can overthrow people if they master the concepts (in my case, I need to nail down the completeness fund approach concept - my understanding is not very solid on that).
 
Question 3:
When determining whether Mr. Jackals should add a small cap index fund to his portfolio, he would most likely add the asset class when:
a. The Sharpe ratio of the small cap fund is less than or equal to the existing portfolio Sharpe Ratio
b. The correlation between the small cap fund and his existing portfolio is low
c. The Sharpe ratio of the small cap fund is equal to the existing portfolio Sharpe Ratio
 
B is very obvious in this case. I’d bang my head if an answer is different.
 
I think B as well although i think there’s a more specific formula.
But to question 2 above, can someone please explain a completeness fund or at least tell me where i can find it in the curriculum, I’m absolutely blanking out on that .
 
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