1. A portfolio manager is considering two options for a benchmark index.The first is an absolute return...
Question:
1. A portfolio manager is considering two options for a benchmark index. The first is an absolute return based on a minimum return target of 9.5% and the second is the median of the universe of US large-cap core equity managers. Which of the following properties of a return point Valid reference do these two options have?
Specified in advance
invertible
Measurable
unambiguous
2. You're trying to understand why your portfolio of top large-cap stocks underperformed its benchmark and perform a sector attribution analysis based on the past year:
Sector | Sectoral Returns | Portfolio weights | Reference weights |
Information technology | 10,75% | 18,71% | 19,06% |
Consumer staples | 12,31% | 16,52% | 16,10% |
Energy | 8,63% | 9,38% | 9,53% |
Utilities | -3,92% | 15,65% | 14,87% |
From this analysis, which sector is the main contributor to the underperformance of the core portfolio relative to its benchmark?
Energy
Utilities
Information technology
Consumer staples
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts