Loose-Leaf Essentials of Investments
Loose-Leaf Essentials of Investments
10th Edition
ISBN: 9781259604966
Author: Kane, Alex, Marcus Professor, Alan J., Bodie Professor, Zvi
Publisher: McGraw-Hill Education
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Chapter 18, Problem 7PS
Summary Introduction

(a)

To calculate:

The return of manager in the month and evaluating whether he is in under or over-performed.

Introduction:

Actual return means the return which is earned by the investor and for computing the actual return of portfolio, weighted average return should be calculated for returns of portfolio.

Summary Introduction

(b)

To calculate:

The contribution of selecting security to the relative performance

Introduction:

Contribution of security selection is calculated by taking difference of return of index and manager's portfolio and gets multiplied by weight of manager portfolio.

Summary Introduction

(c)

To calculate:

The contribution of allocating asset to the relative performance

Introduction:

Contribution of security selection is calculated by taking difference of return of index and total return of benchmark portfolio and gets multiplied by difference of weight of manager portfolio and benchmark portfolio.

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