QUESTION 37

1. A fixed income money manager increases the duration of a portfolio beyond its strategic duration level with the expectations of a rate decline. After one year, rates have indeed fallen, and the manager outperforms the benchmark. The outperformance is most likely due to the:

   		a. Policy Effect
   		b. Rate Anticipation Effect.
   		c. Analysis Effect.
   		d. Trading Effect.

QUESTION 38

1. A money manager generates a return of 11% when the benchmark returns 9%. The manager's asset allocation decisions underperform by 50 basis points. Which is most accurate?

   		a. Asset allocation decisions helped the manager outperform the benchmark.
   		b. The manager outperforms the benchmark by 250 basis points.
   		c. The manager excelled in both asset allocation and security selection decisions.
   		d. Security selection decisions outperform by 250 basis points.