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CFA Level 3
Equity Portfolio Management

Replication Methods in Passive Equity Investing

Very Easy Passive Equity Investing Replication Methods

In passive equity investing, replication methods are commonly used to achieve the desired market exposure while minimizing tracking error. Describe the two primary replication methods used in passive equity investing: full replication and sampling. Explain the advantages and disadvantages of each method and provide an example of a situation where one method may be preferred over the other.

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