Question: In a particular year, a mutual fund earned its return by making the following investments: Weight Return Bonds 30 % 5 % Stocks 70 %

In a particular year, a mutual fund earned its return by making the following investments:

	Weight		Return
Bonds	30	%	5	%
Stocks	70	%	0	.5%

A portfolio earned its return by making the following investments:

	Weight			Return
Bonds	40	%	5		%
Stocks	60	%	-1		%

A.) What is the return of the mutual fund? What is the return of the bogey portfolio? Did the mutual fund outperform or underperform the bogey portfolio?

B.) What is the contribution of asset allocation to the mutual funds underperformance or overperformance?

C.) What is the contribution of security selection to the mutual funds underperformance or overperformance?

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