Tracking Error
	Fund	Benchmark	Active	Dev from	Squared
Period	Return	Return	Return	Mean	Deviation
	%	%	%
1	9.50	10.00
2	4.50	5.00
3	-2.50	-5.00
4	9.50	10.00
5	4.50	5.00
6	-2.50	-5.00
Sum
Mean
Variance
STDEV
a.)	What is the tracking error for this portfolio?
b.)	Interpret your answer.
c.)	Suppose there is another portfolio with an alpha (mean active return) of 0.75 and
	a tracking error of 1.75.
	How might you choose between the two?
	Assume that the only relevant data are the alpha and the tracking error.