After much deliberation, Dennis decides to go with an actively managed, U.S. equity-only portfolio. Exhibit 3 shows,
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Question:
After much deliberation, Dennis decides to go with an actively managed, U.S. equity-only portfolio. Exhibit 3 shows, by sector, the one-month performance of his portfolio and its associated benchmark.
(a) Calculate and interpret the pure sector allocation return for the energy sector. Specify the underlying assumption(s) in your interpretation.
(b) Calculate and interpret the within-sector selection return for the financial sector. Specify the underlying assumption(s) in your interpretation.
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