QUESTION 7

1. Consider the following table which provides a comparison of the returns for a portfolio and its benchmark. Hint: I suggest you copy and complete this table in your notes to answer this question. Note: the numbers in red are negative

   Year	Portfolio Return	Benchmark Return	Portfolio Index	Benchmark Index	Difference	Square of the Differences
   0			1.0000	1.0000
   1	13%	15%
   2	6%	7%
   3	-6%	-8%
   4	22%	20%
   5	51%	49%
   Return
   Alpha
   Sum
   Tracking Error
   Information Ratio

a) Calculate the annualised return of the portfolio and the benchmark in percentage terms to 2 decimal places

b)Calculate the portfolio alpha in percentage terms to 2 decimal places

c) Calculate the tracking error of the portfolio in percentage terms to 2 decimal places

d)Calculate the information ratio of the portfolio to 2 decimal places