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A global equity manager is assigned to select stocks from a universe of large stocks throughout the world. The manager will be evaluated by comparing
A global equity manager is assigned to select stocks from a universe of large stocks throughout the world. The manager will be evaluated by comparing her returns to the return on the MSCI World Market Portfolio, but she is free to hold stocks from various countries in whatever proportions she finds desirable. Results for a given month are contained in the following table: a. Calculate the total value added of all the manager's decisions this period. b. Calculate the value added (or subtracted) by her country allocation decisions. c. Calculate the value added from her stock selection ability within countries. d. Confirm that the sum of the contributions to value added from her country allocation plus security selection decisions equals total over- or underperformance
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