Question
In a particular year, Big Mutual Fund (BMF) earned a total return by making the following investments in the two asset classes, with corresponding returns:
In a particular year, Big Mutual Fund (BMF) earned a total return by making the following investments in the two asset classes, with corresponding returns:
| Weight % | Return % | |
|---|---|---|
| Bonds | 10 | 6 |
| Stocks | 90 | 16 |
The return on a bogey portfolio was based on the following investments in the two asset markets with corresponding returns.
| Weight % | Return % | |
|---|---|---|
| Bonds (Bond index) | 50 | 5 |
| Stocks (Stock index) | 50 | 15 |
Consider the following statements.
I. The contribution of asset allocation across markets to the total excess return was 3%. II. The contribution of selection within markets to the total excess return was 2%.
Which of the following is correct?
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International Finance Theory And Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc Melitz
11th Global Edition
1292238739, 978-1292238739
