CFA ESG Terms Questions With Verified Answers

Active ownership - Answer Active ownership represents actively exercising one's rights as the shareholder of a company, particularly active engagement with management, and discussion on both financial and non financial ESG factors. Active risk - Answer Active risk is the risk that a portfolio assumes in an effort to compete against and beat its benchmark index. It represents how closely a portfolio tracks to or deviates from its benchmark. Activism - Answer A form of investing where the fund manager (often referred to as an activist) buys into a company with the express intention of generating additional returns by catalysing change. AGM, EGM - Answer Respectively, annual general meeting and extraordinary general meeting. The formal gatherings of shareholders to agree official business of a company. The shareholders have the right to take some decisions about the future of the company and these are the occasions when those decisions are taken. The agendas very much depend on the law of the state or country of incorporation of the company. Alpha generation - Answer The risk-adjusted contribution of the value that a portfolio manager contributes - either adding or subtracting - to the fund's investment returns.