Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CAIA Formulas > 4.5 - Equity Hedge Funds > Flashcards

4.5 - Equity Hedge Funds Flashcards

1
Q

Fundamental Law of Active Management (FLOAM)

A
  • 2 components: breadth and skill of actively managed strategies

Breadth - # of independent active trades (short term, uncorrelated trades) in an actively managed portfolio in one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

FLOAM Information Coefficient

A

IC -> information coefficient: measures skill as correlation between actual realized and forecasted managerial returns

IC = correlation (forecasted returns, actual returns)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

FLOAM Information Ratio

A

IR = IC * √breadth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly

CAIA Formulas (27 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions