You Are a Swedish Investor Owning a Portfolio of Swedish

question 7

Essay

You are a Swedish investor owning a portfolio of Swedish and American stocks. Their respective benchmarks are the OMX index and the S&P index. There have been no movements during the
year (cash flows, sales, or purchases, dividends paid). Valuation and performance analysis is done in Swedish krona (SKr). Here are the valuations at the start and the end of the year:
$$\begin{array} { l r r } & \text { January 1 } & \text { December } 31 \\\hline \text { Swedish Stacks } & \text { SKr 500,000 } & \text { SKr 600,000 } \\\text { U.S. Stacks } & \text { SKr 500,000 } & \text { SKr 700,000 } \\\text { Total } & \text { SKr } 1,000,000 & \text { SKr } 1,300,000 \\\text { Exchange Rate } & 5 \text { SKr/\$ } & 6 \text { SKr/s } \\\text { OMX Index } & 100 & 120 \\\text { S\&p Index } & 100 & 125 \\\hline\end{array}$$ a. What is the total return on the portfolio?
b. Decompose this return into capital gain, yield, and currency contribution.
c. What is the contribution of security selection?

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Definitions:

Continuum

A continuous sequence or range where elements change gradually without distinct breaks or jumps.

Functionalism

A theoretical approach in sociology that views society as a complex system whose parts work together to promote solidarity and stability.

Socially Constructed

A concept or perception that exists because of collective agreement or social acceptance, not because of inherent natural qualities.

Sexual Identity

An individual's conception of themselves in relation to sexual attraction, behaviors, and orientation, forming a component of one's overall identity.