Dear all, There seems to be disconnet between the Sch notes and the SchPro bank.
Can anyone provide their view.
Mismatch with the definition in the text which says ‘This is the first level of indexing that is designed to earn about the same return as the index’ Sch book 3 LOS 20b pg 11
Question ID#: 93089
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Thank you
it is a passive strategy - so B) is incorrect,
it allows (ONLY) is present in part C) so it is incorrect.
leaves A) as the answer. Between a pure bond indexing approach and a enhanced indexing with minor factor mismatches - larger mismatches are allowed on the minor factors.
Major factors - duration, - that must be matched.
smaller factors -sector, quality etc. may be mismatched.