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 2.5% 1.5 The manager's return in the month is 0.7 Actual Weight 0.3 0.5 0.2 Required: 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.) Contribution of security selection Benchmark Weight 8.7 0.2 0.1 Contribution of asset allocation Index Return 3% (5&P 500) 1.8 (Barclay's Aggregate) 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.) Check my wo b. What was the contribution of security selection to relative performance? (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) c. What was the contribution of asset allocation to relative performance? (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
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Subject:- finance 

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
2.5%
1.5
0.7
The manager's return in the month is
Actual Weight
0.3
0.5
Required:
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.)
Contribution of security selection
%
Contribution of asset allocation
Bencheark Weight
%
8.7
0.2
0.1
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.)
Index Return
3% (S&P 500)
1.8 (Barclay's Aggregate)
0.8
Check my work
b. What was the contribution of security selection to relative performance? (Do not round intermediate calculations. Round your
answer to 2 decimal places. Negative amount should be indicated by a minus sign.)
c. What was the contribution of asset allocation to relative performance? (Do not round intermediate calculations. Round your
answer to 2 decimal places. Negative amount should be indicated by a minus sign.)
Transcribed Image Text: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 2.5% 1.5 0.7 The manager's return in the month is Actual Weight 0.3 0.5 Required: 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.) Contribution of security selection % Contribution of asset allocation Bencheark Weight % 8.7 0.2 0.1 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.) Index Return 3% (S&P 500) 1.8 (Barclay's Aggregate) 0.8 Check my work b. What was the contribution of security selection to relative performance? (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) c. What was the contribution of asset allocation to relative performance? (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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