Q.1 Which of the following is an incorrect

 statement regarding the relationship between Abnormal Returns (Alphas) that a fund generates and its Tracking Error against a benchmark?

a. Investors determine the level of tracking error and then choose the fund that has a high significant abnormal return (alpha)

b. High Tracking Error can result in low and negative Abnormal Returns (Alphas)

c. High Abnormal Returns (Alphas) are a result of high Tracking Errors.

d. Tracking errors cannot be negative but abnormal returns (Alphas) can be negative

e. High Tracking Error results in high positive Abnormal Returns (Alphas)

Q.2

Portfolio managers who wish to analyse how a portfolio's risk will be impacted by variation in the risk of an asset class will use:

a. Moving averages of portfolio returns adjusted for spending

b. Back (historical) testing adjusted for spending

c. Out-of-sample testing adjusted for spending

d. Scenario analysis adjusted for spending

e. Stress testing adjusted for spending