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: Country U.K. Japan U.S. Germany Weight In MSCI Index Added value 0.21 0.34 0.39 0.06 Contribution of country allocation Manager's Weight 0.42 % 0.2 0.3 0.08 Required: a. Calculate the total value added of all the manager's decisions this period. (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) Contribution of stock selection Manager's Return Return of Stock Index for That Country in Country 21% 12% 14 10 b. Calculate the value added (or subtracted) by her country allocation decisions. (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) 14 12 12 c. Calculate the value added from her stock selection ability within countries. (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) %
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: Country U.K. Japan U.S. Germany Weight In MSCI Index Added value 0.21 0.34 0.39 0.06 Contribution of country allocation Manager's Weight 0.42 % 0.2 0.3 0.08 Required: a. Calculate the total value added of all the manager's decisions this period. (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) Contribution of stock selection Manager's Return Return of Stock Index for That Country in Country 21% 12% 14 10 b. Calculate the value added (or subtracted) by her country allocation decisions. (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) 14 12 12 c. Calculate the value added from her stock selection ability within countries. (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text: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:
Country
U.K.
Japan
U.S.
Germany
Weight In
MSCI Index
Added value
0.21
0.34
0.39
0.06
Manager's
Weight
0.42
0.2
0.3
0.08
Contribution of country allocation
Manager's Return
in Country
Required:
a. Calculate the total value added of all the manager's decisions this period. (Do not round intermediate calculations. Round your
answer to 2 decimal places. Negative amount should be indicated by a minus sign.)
Contribution of stock selection
21%
14
10
5
b. Calculate the value added (or subtracted) by her country allocation decisions. (Do not round intermediate calculations. Round your
answer to 2 decimal places. Negative amount should be indicated by a minus sign.)
%
Return of Stock Index
for That Country
12%
14
12
12
%
c. Calculate the value added from her stock selection ability within countries. (Do not round intermediate calculations. Round your
answer to 2 decimal places. Negative amount should be indicated by a minus sign.)
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