Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager's portfolio in column 1, the fraction of the portfolio allocated to each sector in column 2, the benchmark or neutral sector allocations in column 3, and the returns of sector indices in column 4. Equity Bonds Cash Actual Return Actual Weight 2.6% 1.5 0.8 0.6 0.2 0.2 The manager's return in the month is Benchmark Weight a-1. What was the manager's return in the month? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.) % 0.6 0.1 0.3 % Index Return 3.1% (S&P 500) 1.7 (Barclay's Aggregate) 0.9 (T-Bills) a-2. What was her overperformance or underperformance? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)
Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager's portfolio in column 1, the fraction of the portfolio allocated to each sector in column 2, the benchmark or neutral sector allocations in column 3, and the returns of sector indices in column 4. Equity Bonds Cash Actual Return Actual Weight 2.6% 1.5 0.8 0.6 0.2 0.2 The manager's return in the month is Benchmark Weight a-1. What was the manager's return in the month? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.) % 0.6 0.1 0.3 % Index Return 3.1% (S&P 500) 1.7 (Barclay's Aggregate) 0.9 (T-Bills) a-2. What was her overperformance or underperformance? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)
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Chapter1: Combinatorial Analysis
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![### Analyzing a Money Manager’s Performance
Consider the following information regarding the performance of a money manager in a recent month. The table below represents the actual return of each sector of the manager’s portfolio, the fraction of the portfolio allocated to each sector, benchmark or neutral sector allocations, and the returns of sector indices.
| Sector | Actual Return | Actual Weight | Benchmark Weight | Index Return |
|----------|-----------------|---------------|------------------|-------------------------|
| Equity | 2.6% | 0.6 | 0.6 | 3.1% (S&P 500) |
| Bonds | 1.5% | 0.2 | 0.1 | 1.7% (Barclay’s Aggregate) |
| Cash | 0.8% | 0.2 | 0.3 | 0.9% (T-Bills) |
#### Questions:
**a-1. What was the manager's return in the month?**
*(Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)*
\[ \text{The manager’s return in the month is} \ \underline{\hspace{50px}} \% \]
**a-2. What was her overperformance or underperformance?**
*(Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)*
\[ \underline{\hspace{50px}} \% \]
### Analysis:
To answer these questions, follow these steps:
1. **Calculate the Manager's Return:**
The manager's return is the weighted average of the returns of each sector in the portfolio. This is calculated as follows:
- For Equity: \(0.6 \times 2.6\% = 1.56\%\)
- For Bonds: \(0.2 \times 1.5\% = 0.30\%\)
- For Cash: \(0.2 \times 0.8\% = 0.16\%\)
Sum the contributions of each sector to get the total return:
\[ 1.56\% + 0.30\% + 0.16\% = 2.02\% \]
2. **Calculate Benchmark](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff1fd60a6-e122-44a6-b63f-53f11d7f8fb8%2F4437aaf3-d8cf-4844-991a-847c11c9fee0%2Fp0uz81_processed.png&w=3840&q=75)
Transcribed Image Text:### Analyzing a Money Manager’s Performance
Consider the following information regarding the performance of a money manager in a recent month. The table below represents the actual return of each sector of the manager’s portfolio, the fraction of the portfolio allocated to each sector, benchmark or neutral sector allocations, and the returns of sector indices.
| Sector | Actual Return | Actual Weight | Benchmark Weight | Index Return |
|----------|-----------------|---------------|------------------|-------------------------|
| Equity | 2.6% | 0.6 | 0.6 | 3.1% (S&P 500) |
| Bonds | 1.5% | 0.2 | 0.1 | 1.7% (Barclay’s Aggregate) |
| Cash | 0.8% | 0.2 | 0.3 | 0.9% (T-Bills) |
#### Questions:
**a-1. What was the manager's return in the month?**
*(Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)*
\[ \text{The manager’s return in the month is} \ \underline{\hspace{50px}} \% \]
**a-2. What was her overperformance or underperformance?**
*(Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)*
\[ \underline{\hspace{50px}} \% \]
### Analysis:
To answer these questions, follow these steps:
1. **Calculate the Manager's Return:**
The manager's return is the weighted average of the returns of each sector in the portfolio. This is calculated as follows:
- For Equity: \(0.6 \times 2.6\% = 1.56\%\)
- For Bonds: \(0.2 \times 1.5\% = 0.30\%\)
- For Cash: \(0.2 \times 0.8\% = 0.16\%\)
Sum the contributions of each sector to get the total return:
\[ 1.56\% + 0.30\% + 0.16\% = 2.02\% \]
2. **Calculate Benchmark
![### Question b
**What was the contribution of security selection to relative performance?**
*Instructions:* Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.
**Input Field:**
- Contribution of security selection [Textbox] %
---
### Question c
**What was the contribution of asset allocation to relative performance?**
*Instructions:* Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.
**Input Field:**
- Contribution of asset allocation [Textbox] %
---
No graphs or diagrams are present in the provided image.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff1fd60a6-e122-44a6-b63f-53f11d7f8fb8%2F4437aaf3-d8cf-4844-991a-847c11c9fee0%2F0dorzxo_processed.png&w=3840&q=75)
Transcribed Image Text:### Question b
**What was the contribution of security selection to relative performance?**
*Instructions:* Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.
**Input Field:**
- Contribution of security selection [Textbox] %
---
### Question c
**What was the contribution of asset allocation to relative performance?**
*Instructions:* Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.
**Input Field:**
- Contribution of asset allocation [Textbox] %
---
No graphs or diagrams are present in the provided image.
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