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:
Mark Bonds Stocks Weight ( 90%) Bond ( 10 % ) . Stock returns ( 6%) and bond ( 16%)
The return on a bogey portfolio was based on the following investments in the two asset markets with corresponding returns.
Bonds (Bond index) Stocks (Stock index)
Bonds (Bond index) Weight % 50 and return 5 %
Stock Weight 50 % return 15 %
Consider the following statements.
1. 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?
a. Statement I is incorrect, Statement II is correct.
b. Statement I is incorrect, Statement II is incorrect. O
c. Statement I is correct, Statement II is correct. O
d. Statement I is correct, Statement II is incorrect. Unsure
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