You own a portfolio of Swedish and American stocks. Their respective benchmarks are the OMX and S&P 500 indexes, and the Swedish and American portfolios are closely matched to their benchmarks in risk. There have been no movements during the year (cash flows, sales or purchase, dividends paid). Valuation and performance analysis is done in Swedish kronor (SKr). Here are the valuations at the start and the end of the year:

a. What is the total return on the portfolio?
b. Decompose this return into capital gain, yield, and currency contribution.
c. What is the contribution of security selection?

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January 1 December 31 Swedish stocks U.S. stocks Total Exchange rate OMX index S&P index SKr600,000 SKr600,000 SKr1,200,000 SKr6 per $ 100 100 SKr660,000 SKr702,000 SKr1,362,000 SKr5.4 per $ 120 125