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(Solved): Calculate the tracking error for Manager A relative to the index. You are told that Manager B had a ...
Calculate the tracking error for Manager A relative to the index. You are told that Manager B had a tracking error of \( 2.07 \% \). Which manager did a better job of limiting his or her client's unsystematic risk exposure? Explain. Returns are on an annual basis.
Expert Answer
Step 1: Introduction Tracking Error: The term "tracking error" refers to the annualized standard deviation of the variance in returns that exists between