The following data about actively managed portfolio and it's benchmark are given Portfolio weights by asset classes Return rates Active portfolio Benchmark Active portfolio ( ) Benchmark ( ) Shares 0,50 0,55 9,8 8,8 Bonds 0,35 0,30 7,6 8,1 Money market instruments 0,15 0,15 4,5 4,4 Calculate selection effect and allocation effect for the active portfolio described above Describe what type of investment decisions constitute allocation decisions and what type constitutes selection decisions

The Answer is in the image, click to view ...

Question: The following data about actively managed portfolio and it's benchmark are given: Portfolio weights by asset classes Return rates Active portfolio Benchmark Active portfolio (%)

The following data about actively managed portfolio and it's benchmark are given:

	Portfolio weights by asset classes		Return rates
	Active portfolio	Benchmark	Active portfolio (%)	Benchmark (%)
Shares	0,50	0,55	9,8	8,8
Bonds	0,35	0,30	7,6	8,1
Money market instruments	0,15	0,15	4,5	4,4

Calculate selection effect and allocation effect for the active portfolio described above. Describe what type of investment decisions constitute allocation decisions and what type constitutes selection decisions

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

The following data about actively managed portfolio and it's benchmark are given: Portfolio weights by asset classes Return rates Active portfolio Benchmark Active portfolio (%) Benchmark (%) Shares...

3. You wish to construct a tracking portfolio with portfolio weights w=(w1, W2, ..., Wk) where wi is the portfolio weight for the ith stock. Your objective is to measure the performance of your...

7. The WorIdValue fund has value weights on asset classes and returns as given in the table below. There are four major asset classes: Europe, Pacific, Emerging and North America. The table also...

Everyone has witnessed quite volatile and anxious financial markets around the globe since the beginning of the year. Individual clients have fears to invest into any portfolios due to high...

Hi...tutors. 20. Your current portfolio consists of three assets, the common stock of IBM and GM combined with an investment in the riskless asset. You know the following about the stocks (p,,...

Parmacheenee Belle's entire common stock portfolio ($500,000) is allotted to an index fund tracking the Standard & Poors 500 index. The expected rate of return on the index is 9.5% and the standard...

You want to evaluate the performance of an actively managed portfolio and have gathered the following data: Part 1 Attempt 1/10 for 10p What was the excess return of the active portfolio compared to...

HI! can you please answer the Long answer question #1, part h), on the attached file! Thank you very much UNIVERSITY OF MANITOBA Faculty of Management Department of Accounting and Finance Professors:...

Attached is a file. See page 14. I need answer for part e). Please read instructions for rounding rules. UNIVERSITY OF MANITOBA Faculty of Management Department of Accounting and Finance Professors:...

Hi I need answers immediately. Attached is a file. I need the detailed solutions (no excel, can be typed or handwritten) to the long answer portions ONLY. Please read instructions for rounding rules....

Bill and Warren have decided to acquire CellU in order to expand CompU's product line. They are trying to decide how to finance the acquisition, and are currently looking at financing it by issuing...

The accounting profit before tax of Cherry Ltd for the year ended 31 December 2012 amounted to $5,000 after including the following information: Accrued interest payable: Opening balance as at 1...

Company X sells 3 0 , 0 0 0 templates per year. The company orders templates 6 times per year and sells templates at a constant rate. If the company maintains no safety stock, what is the average...

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...