During 2021, HESTA super fund earned a return of 1% p.a. by making the following investments in asset classes: Weight Return(p.a.) Bonds 20% 5% Stocks 80% 0% The return on a benchmark portfolio was 2% p.a., calculated from the following information. Weight Return(p.a.) Bonds (ASX Index) 50% 5% Stocks (ASX Index) 50% -1% The contribution of asset allocation across markets to the HESTA Super fund's annual total abnormal return wa: ✓ -1.80%. -1.00%. 0.80%. The contribution of selection within markets to the HESTA Super fund's annual total abnormal return was 1.00%.

During 2021, HESTA super fund earned a return of 1% p.a. by making the following investments in asset classes: Weight Return(p.a.) Bonds 20% 5% Stocks 80% 0% The return on a benchmark portfolio was 2% p.a., calculated from the following information. Weight Return(p.a.) Bonds (ASX Index) 50% 5% Stocks (ASX Index) 50% -1% The contribution of asset allocation across markets to the HESTA Super fund's annual total abnormal return wa: ✓ -1.80%. -1.00%. 0.80%. The contribution of selection within markets to the HESTA Super fund's annual total abnormal return was 1.00%.

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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Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

During 2021, HESTA super fund earned a return of 1% p.a. by making the following investments in asset classes:
Weight
Return(p.a.)
Bonds
20%
5%
Stocks
80%
0%
The return on a benchmark portfolio was 2% p.a., calculated from the following information.
Weight Return(p.a.)
Bonds (ASX Index) 50%
5%
Stocks (ASX Index) 50%
-1%
The contribution of asset allocation across markets to the HESTA Super fund's annual total abnormal return wa: ✓
-1.80%.
-1.00%.
0.80%.
The contribution of selection within markets to the HESTA Super fund's annual total abnormal return was
1.00%.

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