17 December 2024

Rethinking the active-passive divide

Multiple-choice questions. In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please reread the article before attempting the questions again.

  1. According to the CFA Institute, what proportion of global fund net assets come from exchange-traded funds and equity index funds?

  2. In non-equity asset classes, approximately what is the ratio of active funds to index funds?

  3. Which theory helped to shape the concept of passive management?

  4. Which of the following statements is true? Statement 1, an asset's beta is enough to capture the information needed to build an efficient market portfolio, or statement 2, an asset's beta can only capture the correct information during a bear market

  5. Which of the following statements is true? Statement 1, passive investments track a market-capitalisation-weighted index, or statement 2, active investments exploit market inefficiencies

  6. Which aspects of an asset does fundamental weighting take into account?

  7. How can a smart beta fund be described?

  8. Which of the following statements is true? Statement 1, with smart beta funds, the value factor considers book-to-price ratios, or statement 2, with smart beta funds, the value factor examines returns on equity

  9. Which type of indexing allows investors to curate personal portfolios?

  10. When did passive management first become popularised?

1 Unit