A IS CORRECT. THE INFORMATION RATIO OF AN ACTIVELY MANAGED PORTFOLI...

2. A is correct. The information ratio of an actively managed portfolio, IR, is calculated by

dividing the active return by active risk: IR =

^𝑅

^𝑃

^−𝑅

^𝐵

𝑆𝑇𝐷(𝑅

𝑃

−𝑅

𝐵

)

IR

Fund A

=

(13.5−10.25)7

= 0.46. IR

Fund B

=

(12.8−10.25)