Question: Problem 1 8 - 1 7 ( Static ) Primo Management Company is looking at how best to evaluate the performance of its managers. The
Problem Static Primo Management Company is looking at how best to evaluate the performance of its managers. The company has hired Sally Jones, CFA, to educate its managers on the best methods for constructing a benchmark portfolio, how to choose the best benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of benchmarking. Jones put together some twoyear performance numbers comparing Primo's current domestic funds to a potential benchmark. As part of her analysis, Jones also takes a look at one of Primo's global funds. In this particular portfolio, Primo is invested in Dutch stocks and in British stocks. The benchmark is invested in Dutch and in British stocks. On average, the British stocks outperformed the Dutch stocks. The euro appreciated versus the US dollar over the holding period while the pound depreciated versus the dollar. In terms of the local return, Primo outperformed the benchmark with the Dutch investments but underperformed the index with respect to the British stocks. Required: What is the withinsector selection effect for each individual sector? Note: Round your answers to decimal place. Negative amount should be indicated by a minus sign. Answer is complete but not entirely correct.
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