Consider the following information regarding the performance of a money manager

Question

Consider the following information regarding the performance of a money manager in a recent month. The table presents the actual return of each sector of the manager's portfolio in column (1), the fraction of the portfolio allocated to each sector in column (2), the benchmark or neutral sector allocations in column (3) and the returns of sector indexes in column (4) Actual Benchmark Index Return Actual ReturnWeightWeight 0.30 0.50 0.20 2.5% 1.8 1.4 0.20 0.60 0.20 3.4% 2.3 1.4 (S&P; 500) (Aggregate Bond index) Bonds Cash a-1. What was the manager's return in the month? (Do not round intermediate calculations Enter your answer as a percentage rounded to 2 decimal places.) Manager's return 1.93 % a-2. What was her over- or under-performance? (Enter a positive value for over-performance or a negative value (using a minus sign) for under-performance. Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) Over-or underperformance

Explanation / Answer

Index Return = 0.20 * 3.4% + 0.60 * 2.3% + 0.20 * 1.4%

Index Return = 2.34%

Manager Return = 0.30 * 2.5% + 0.50 * 1.8% + 0.20 * 1.4%

Manager Return = 1.93%

Underperfomance = 1.93% - 2.34%

Underperfomance = -0.41%

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.