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Explanation:
Information Ratio = IC × √BR
IC = Information Coefficient
BR = Breadth of the strategy
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Q.2416 An investment management firm recruits multiple fund managers to manage its funds. In order to have some control over transaction costs, the firm allows each manager to make a maximum of 100 transactions per year. One of the fund managers wants an information ratio of 0.75. Assuming the “fundamental law” applies, her information coefficient must be equal to:
A
0.75
B
0.0075
C
0.075
D
7.5