Weights Policy Actual 50% stocks 60% stocks 50% bonds 40% bonds Returns Index Actual 8% stocks 9% stocks 5% bonds 7% bonds Refer to Exhibit 18.11. Which of the following statements is TRUE? a. Sector/security selection hurt the portfolio performance; returns were 6.8% less than if the manager invested the funds in stocks and bond indexes. b. Sector/security selection improved the port-folio performance by 6.8%; each sector return was higher than for index return. c. Sector/security selection improved the port-folio performance by 1.4%; each sector return was higher than for index value. d. Sector/security selection hurt the portfolio performance; returns were 1.4% less than if the manager invested the funds in stocks and bond indexes.
Weights Policy Actual 50% stocks 60% stocks 50% bonds 40% bonds Returns Index Actual 8% stocks 9% stocks 5% bonds 7% bonds Refer to Exhibit 18.11. Which of the following statements is TRUE? a. Sector/security selection hurt the portfolio performance; returns were 6.8% less than if the manager invested the funds in stocks and bond indexes. b. Sector/security selection improved the port-folio performance by 6.8%; each sector return was higher than for index return. c. Sector/security selection improved the port-folio performance by 1.4%; each sector return was higher than for index value. d. Sector/security selection hurt the portfolio performance; returns were 1.4% less than if the manager invested the funds in stocks and bond indexes.
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 16P
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Question
Exhibit 18.11
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM
Refer to Exhibit 18.11. Which of the following statements is TRUE?
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM
| Weights | |
| Policy | Actual |
| 50% stocks | 60% stocks |
| 50% bonds | 40% bonds |
| Returns | |
| Index | Actual |
| 8% stocks | 9% stocks |
| 5% bonds | 7% bonds |
Refer to Exhibit 18.11. Which of the following statements is TRUE?
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