What explains the financial performance of brokerage houses? Table 12.5.8 shows the one-year performance of asset-allocation blends
Question:
a. What proportion of the variation in performance is explained by the recommended percentages in stocks and bonds?
b. Do the recommended percentages explain a significant amount of the variation in performance?
c. Does the recommended percentage for stocks have a significant impact on performance, adjusted for the recommended percentage for bonds?
d. Does the recommended percentage for bonds have] a significant impact on performance, adjusted for the recommended percentage for stocks?
e. Which appears to have a greater impact on performance: stocks or bonds?
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TABLE 12.5.8 Brokerage House Asset-Allocation One-Year Performance and Recommended Percentages in Stocks and Bonds Brokerage Firm Lehman Brothers Morgan Stanley D.W Edward D. jones Prudential Securities Goldman Sachs Raymond James A.G. Edwards PaineWebber Credit Suisse F.B. J.P. Morgan Bear Stearns Salomon Smith Barney Merrill Lynch Performance Stocks 80% 70 71 75 70 Bonds 10% 20 24 14.62% 14.35 13.86 1336 12.98 10.18 10.04 9.44 9.33 9.13 8.75 8.57 5.15 27 15 35 37 30 25 35 35 60 48 50 40
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