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2K19/DMBA/18 ANKUR VARSHNEY
on Dec 08, 2024

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In a particular year, Roll Tide Mutual Fund earned a return of 15% by making the following investments in the following asset classes:  Weight  Return  Bonds 10%6% Stocks 90%16%\begin{array}{cc}& \text { Weight } & \text { Return }\\ \text { Bonds } &10\%&6\%\\ \text { Stocks } &90\%&16\%\\\end{array} Bonds  Stocks  Weight 10%90% Return 6%16%



The return on a bogey portfolio was 10%, calculated as follows:
 Weight  Return  Bonds (Lehman Brother Index)  50%5% Stacks (S&P 500 Index)  50%15%\begin{array}{cc}& \text { Weight } & \text { Return }\\ \text { Bonds (Lehman Brother Index) } &50\%&5\%\\ \text { Stacks (S\&P 500 Index) } &50\%&15\%\\\end{array} Bonds (Lehman Brother Index)   Stacks (S&P 500 Index)   Weight 50%50% Return 5%15%


The contribution of asset allocation across markets to the total abnormal return was

A) 1%.
B) 3%.
C) 4%.
D) 5%.

Asset Allocation

The strategy of distributing investments among various classes of assets to manage risk and enhance returns.

Abnormal Return

Abnormal Return is the difference in the actual return of a security over a set period of time from its expected return based on the market or model prediction.

Bonds

Fixed income investment products that represent a loan made by an investor to a borrower, typically corporate or governmental, which pays periodic interest payments and the return of the principal at maturity.

  • Apprehend the impact that the distribution and picking of assets in the market have on the aggregate atypical return of an investment.
  • Investigate the effects of asset allocation and security selection on fund performance outcomes.
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LaCinda GriffinDec 14, 2024
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