The Manager of Cross Border Fund Uses EAFE as a Benchmark

question 49

Multiple Choice

The manager of Cross Border Fund uses EAFE as a benchmark. Last year's performance for the fund and the benchmark were as follows: $\begin{array}{ccccc}&\text { EAFE } & \text { Return on } & \text { Currency } & \text { Cross } & \text { Manager's } \\&\text { Weight } & \text { Equity } & \text { Aplication } & \text { Border's } & \text { Return } \\&& \text { Index } & E_{1} / E_{0-1} & \text { Weight } &\\ \text { Eur } &0.30&10\%&10\%&0.25&9\%\\ \text { Aus } &0.10&5\%&-10\%&0.25&8\%\\ \text { FE } &0.60&15\%&30\%&0.50&16\%\\\end{array}$ Calculate Cross Border's currency selection return contribution.

• A) +20%
• B) ?5%
• C) +15%
• D) +5%
• E) ?10%

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Definitions:

Game Theory

The study of mathematical models of strategic interaction among rational decision-makers.

Tit-for-Tat

A strategy in repeated games where a player replicates the opponent's previous action, often used in the context of cooperative behaviors or retaliatory tactics.

Prisoners' Dilemma Game

A standard example of a game analyzed in game theory that shows why two individuals might not cooperate, even if it appears that it is in their best interest to do so.

Tit-for-Tat Strategy

A reciprocal strategy in game theory where an entity responds to an action with a similar action, promoting cooperation.