(a) To calculate: The total value added arrived due to the decisions taken by all the managers. Introduction: The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Question

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Answer 1

Question

Chapter 18, Problem 12PS

Summary Introduction

(a)

To calculate:

The total value added arrived due to the decisions taken by all the managers.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Expert Solution

Answer to Problem 12PS

The total value added is −1.3% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The formula for total value added is:

Total Value Added=Return as per manager's weights−Return as per MSCI weights

Now, Return as per manager's weight is:

Return=0.30×20%+0.10×15%+0.40×10%+0.20×5%=0.06+0.015+0.04+0.01=12.50%

Return as per MSCI weight is:

Return=0.15×12%+0.30×15%+0.45×14%+0.10×12%=0.018+0.045+0.063+0.012=13.80%

Thus, as per the above calculation, the total value added for all managers' decision is:

Total Value Added=12.50%−13.80%=−1.3%

Summary Introduction

(b)

To calculate:

The value added arrived due to the decisions taken by her country allocations.

Introduction:

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return.

Expert Solution

Answer to Problem 12PS

The value added is −0.70% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 1

Thus, the value added for country allocation is −0.70% .

Summary Introduction

(c)

To calculate:

The value added arrived due to the ability of the stock selection within the country.

Introduction:

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The value added is −0.60% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 2

Thus, the value added for country allocation is −0.60% .

Summary Introduction

(d)

To determine:

The value added arrived due to the decisions taken by her country allocations and ability of the stock selection within the country is equal, under or over performance with the total value added computed on all manager's decision.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The total of value added of country allocation decision and stock selection is equal to total value added.

Explanation of Solution

The total of value added of country allocation decision and stock selection is equal to total value added is confirmed by as follows:

Total value added=Value added Country decision+Value added Stock selection−1.3%=−0.70%+−0.60%

Thus, the contributions of both value added is confirmed to be equal to total value added.

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Answer 2

Question

Chapter 18, Problem 12PS

Summary Introduction

(a)

To calculate:

The total value added arrived due to the decisions taken by all the managers.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Expert Solution

Answer to Problem 12PS

The total value added is −1.3% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The formula for total value added is:

Total Value Added=Return as per manager's weights−Return as per MSCI weights

Now, Return as per manager's weight is:

Return=0.30×20%+0.10×15%+0.40×10%+0.20×5%=0.06+0.015+0.04+0.01=12.50%

Return as per MSCI weight is:

Return=0.15×12%+0.30×15%+0.45×14%+0.10×12%=0.018+0.045+0.063+0.012=13.80%

Thus, as per the above calculation, the total value added for all managers' decision is:

Total Value Added=12.50%−13.80%=−1.3%

Summary Introduction

(b)

To calculate:

The value added arrived due to the decisions taken by her country allocations.

Introduction:

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return.

Expert Solution

Answer to Problem 12PS

The value added is −0.70% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 1

Thus, the value added for country allocation is −0.70% .

Summary Introduction

(c)

To calculate:

The value added arrived due to the ability of the stock selection within the country.

Introduction:

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The value added is −0.60% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 2

Thus, the value added for country allocation is −0.60% .

Summary Introduction

(d)

To determine:

The value added arrived due to the decisions taken by her country allocations and ability of the stock selection within the country is equal, under or over performance with the total value added computed on all manager's decision.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The total of value added of country allocation decision and stock selection is equal to total value added.

Explanation of Solution

The total of value added of country allocation decision and stock selection is equal to total value added is confirmed by as follows:

Total value added=Value added Country decision+Value added Stock selection−1.3%=−0.70%+−0.60%

Thus, the contributions of both value added is confirmed to be equal to total value added.

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Answer 3

Question

Chapter 18, Problem 12PS

Summary Introduction

(a)

To calculate:

The total value added arrived due to the decisions taken by all the managers.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Expert Solution

Answer to Problem 12PS

The total value added is −1.3% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The formula for total value added is:

Total Value Added=Return as per manager's weights−Return as per MSCI weights

Now, Return as per manager's weight is:

Return=0.30×20%+0.10×15%+0.40×10%+0.20×5%=0.06+0.015+0.04+0.01=12.50%

Return as per MSCI weight is:

Return=0.15×12%+0.30×15%+0.45×14%+0.10×12%=0.018+0.045+0.063+0.012=13.80%

Thus, as per the above calculation, the total value added for all managers' decision is:

Total Value Added=12.50%−13.80%=−1.3%

Summary Introduction

(b)

To calculate:

The value added arrived due to the decisions taken by her country allocations.

Introduction:

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return.

Expert Solution

Answer to Problem 12PS

The value added is −0.70% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 1

Thus, the value added for country allocation is −0.70% .

Summary Introduction

(c)

To calculate:

The value added arrived due to the ability of the stock selection within the country.

Introduction:

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The value added is −0.60% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 2

Thus, the value added for country allocation is −0.60% .

Summary Introduction

(d)

To determine:

The value added arrived due to the decisions taken by her country allocations and ability of the stock selection within the country is equal, under or over performance with the total value added computed on all manager's decision.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The total of value added of country allocation decision and stock selection is equal to total value added.

Explanation of Solution

The total of value added of country allocation decision and stock selection is equal to total value added is confirmed by as follows:

Total value added=Value added Country decision+Value added Stock selection−1.3%=−0.70%+−0.60%

Thus, the contributions of both value added is confirmed to be equal to total value added.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 18, Problem 12PS

Summary Introduction

(a)

To calculate:

The total value added arrived due to the decisions taken by all the managers.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Expert Solution

Answer to Problem 12PS

The total value added is −1.3% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The formula for total value added is:

Total Value Added=Return as per manager's weights−Return as per MSCI weights

Now, Return as per manager's weight is:

Return=0.30×20%+0.10×15%+0.40×10%+0.20×5%=0.06+0.015+0.04+0.01=12.50%

Return as per MSCI weight is:

Return=0.15×12%+0.30×15%+0.45×14%+0.10×12%=0.018+0.045+0.063+0.012=13.80%

Thus, as per the above calculation, the total value added for all managers' decision is:

Total Value Added=12.50%−13.80%=−1.3%

Summary Introduction

(b)

To calculate:

The value added arrived due to the decisions taken by her country allocations.

Introduction:

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return.

Expert Solution

Answer to Problem 12PS

The value added is −0.70% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 1

Thus, the value added for country allocation is −0.70% .

Summary Introduction

(c)

To calculate:

The value added arrived due to the ability of the stock selection within the country.

Introduction:

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The value added is −0.60% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 2

Thus, the value added for country allocation is −0.60% .

Summary Introduction

(d)

To determine:

The value added arrived due to the decisions taken by her country allocations and ability of the stock selection within the country is equal, under or over performance with the total value added computed on all manager's decision.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The total of value added of country allocation decision and stock selection is equal to total value added.

Explanation of Solution

The total of value added of country allocation decision and stock selection is equal to total value added is confirmed by as follows:

Total value added=Value added Country decision+Value added Stock selection−1.3%=−0.70%+−0.60%

Thus, the contributions of both value added is confirmed to be equal to total value added.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 18, Problem 12PS

Summary Introduction

(a)

To calculate:

The total value added arrived due to the decisions taken by all the managers.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Expert Solution

Answer to Problem 12PS

The total value added is −1.3% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The formula for total value added is:

Total Value Added=Return as per manager's weights−Return as per MSCI weights

Now, Return as per manager's weight is:

Return=0.30×20%+0.10×15%+0.40×10%+0.20×5%=0.06+0.015+0.04+0.01=12.50%

Return as per MSCI weight is:

Return=0.15×12%+0.30×15%+0.45×14%+0.10×12%=0.018+0.045+0.063+0.012=13.80%

Thus, as per the above calculation, the total value added for all managers' decision is:

Total Value Added=12.50%−13.80%=−1.3%

Summary Introduction

(b)

To calculate:

The value added arrived due to the decisions taken by her country allocations.

Introduction:

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return.

Expert Solution

Answer to Problem 12PS

The value added is −0.70% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 1

Thus, the value added for country allocation is −0.70% .

Summary Introduction

(c)

To calculate:

The value added arrived due to the ability of the stock selection within the country.

Introduction:

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The value added is −0.60% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 2

Thus, the value added for country allocation is −0.60% .

Summary Introduction

(d)

To determine:

The value added arrived due to the decisions taken by her country allocations and ability of the stock selection within the country is equal, under or over performance with the total value added computed on all manager's decision.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The total of value added of country allocation decision and stock selection is equal to total value added.

Explanation of Solution

The total of value added of country allocation decision and stock selection is equal to total value added is confirmed by as follows:

Total value added=Value added Country decision+Value added Stock selection−1.3%=−0.70%+−0.60%

Thus, the contributions of both value added is confirmed to be equal to total value added.

Answer 6

Chapter 18, Problem 12PS

Summary Introduction

(a)

To calculate:

The total value added arrived due to the decisions taken by all the managers.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Expert Solution

Answer to Problem 12PS

The total value added is −1.3% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The formula for total value added is:

Total Value Added=Return as per manager's weights−Return as per MSCI weights

Now, Return as per manager's weight is:

Return=0.30×20%+0.10×15%+0.40×10%+0.20×5%=0.06+0.015+0.04+0.01=12.50%

Return as per MSCI weight is:

Return=0.15×12%+0.30×15%+0.45×14%+0.10×12%=0.018+0.045+0.063+0.012=13.80%

Thus, as per the above calculation, the total value added for all managers' decision is:

Total Value Added=12.50%−13.80%=−1.3%

Answer 7

Chapter 18, Problem 12PS

Summary Introduction

(a)

To calculate:

The total value added arrived due to the decisions taken by all the managers.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Answer 8

Expert Solution

Answer to Problem 12PS

The total value added is −1.3% .

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The formula for total value added is:

Total Value Added=Return as per manager's weights−Return as per MSCI weights

Now, Return as per manager's weight is:

Return=0.30×20%+0.10×15%+0.40×10%+0.20×5%=0.06+0.015+0.04+0.01=12.50%

Return as per MSCI weight is:

Return=0.15×12%+0.30×15%+0.45×14%+0.10×12%=0.018+0.045+0.063+0.012=13.80%

Thus, as per the above calculation, the total value added for all managers' decision is:

Total Value Added=12.50%−13.80%=−1.3%

Answer 13

Summary Introduction

(b)

To calculate:

The value added arrived due to the decisions taken by her country allocations.

Introduction:

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return.

Expert Solution

Answer to Problem 12PS

The value added is −0.70% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 1

Thus, the value added for country allocation is −0.70% .

Answer 14

Summary Introduction

(b)

To calculate:

The value added arrived due to the decisions taken by her country allocations.

Introduction:

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return.

Answer 15

Expert Solution

Answer to Problem 12PS

The value added is −0.70% .

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 1

Thus, the value added for country allocation is −0.70% .

Answer 20

Summary Introduction

(c)

To calculate:

The value added arrived due to the ability of the stock selection within the country.

Introduction:

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The value added is −0.60% .

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 2

Thus, the value added for country allocation is −0.60% .

Answer 21

Summary Introduction

(c)

To calculate:

The value added arrived due to the ability of the stock selection within the country.

Introduction:

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Answer 22

Expert Solution

Answer to Problem 12PS

The value added is −0.60% .

Answer 23

Expert Solution

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Given Information:

Results for a given month are in the following table:

Country	Weights (MSCI)	Weights (Manager's)	Manager's return in Country	Return of stock index for that Country
U.K.	0.15	0.30	20%	12%
Japan	0.30	0.10	15%	15%
U.S.	0.45	0.40	10%	14%
Germany	0.10	0.20	5%	12%

The following table is showing computation of value added:

ESSEN OF INVESTMENTS CONNECT AC, Chapter 18, Problem 12PS , additional homework tip 2

Thus, the value added for country allocation is −0.60% .

Answer 27

Summary Introduction

(d)

To determine:

The value added arrived due to the decisions taken by her country allocations and ability of the stock selection within the country is equal, under or over performance with the total value added computed on all manager's decision.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Expert Solution

Answer to Problem 12PS

The total of value added of country allocation decision and stock selection is equal to total value added.

Explanation of Solution

The total of value added of country allocation decision and stock selection is equal to total value added is confirmed by as follows:

Total value added=Value added Country decision+Value added Stock selection−1.3%=−0.70%+−0.60%

Thus, the contributions of both value added is confirmed to be equal to total value added.

Answer 28

Summary Introduction

(d)

To determine:

The value added arrived due to the decisions taken by her country allocations and ability of the stock selection within the country is equal, under or over performance with the total value added computed on all manager's decision.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights

The value added by allocation of country decision is computed by calculating excess (deficit) weight of manager's portfolio over the portfolio of MSCI and get it multiplied with MSCI return

The value added by ability of stock selection is computed by calculating excess (deficit) return of manager's return over the return of MSCI and get it multiplied with weights of manager's portfolio.

Answer 29

Expert Solution

Answer to Problem 12PS

The total of value added of country allocation decision and stock selection is equal to total value added.

Answer 30

Expert Solution

Answer 31

Expert Solution

Answer 32

Expert Solution

Answer 33

Explanation of Solution

The total of value added of country allocation decision and stock selection is equal to total value added is confirmed by as follows:

Total value added=Value added Country decision+Value added Stock selection−1.3%=−0.70%+−0.60%

Thus, the contributions of both value added is confirmed to be equal to total value added.

Answer 34

Ch. 18.1 - Prob. 1EQ Ch. 18.1 - Which fund would you choose if you were...Ch. 18.6 - Prob. 1EQ Ch. 18.6 - What would happen to the contribution of security...Ch. 18 - Prob. 1PS Ch. 18 - Is it possible for a positive alpha to be...Ch. 18 - Prob. 3PS Ch. 18 - Prob. 5PS Ch. 18 - 6. stock price and dividend history are as...Ch. 18 - Prob. 7PS

(a) To calculate: The total value added arrived due to the decisions taken by all the managers. Introduction: The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Concept explainers

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(a)

To calculate:

The total value added arrived due to the decisions taken by all the managers.

Introduction:

The total value added is computed by calculating excess (deficit) return ascertained by return as per manager's weights over the return as per MSCI weights.

Answer to Problem 12PS

Explanation of Solution

Answer to Problem 12PS

Explanation of Solution

Answer to Problem 12PS

Explanation of Solution

Answer to Problem 12PS

Explanation of Solution

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