Exhibit 25 -Refer to Exhibit 25

question 97

Multiple Choice

Exhibit 25.8
Use the Information Below for the Following Problem(S)
$$\begin{array}{l}\text { Weights }\\\begin{array} { l l } \text { Palic } & \text { Actural } \\\hline 50 \% \text { stacks } & 60 \% \text { stacks } \\50 \% \text { bands } & 4 [ 1 / \text { bands } \\\text { Returns } & \\\text { Index } & \text { Actural } \\\hline \text { 98 stocks } & 9 \% \text { stocks } \\5 \% \text { bonds } & 7 \% \text { bonds }\end{array}\end{array}$$
-Refer to Exhibit 25.8.Which of the following statements is true?

• A) Sector/security selection hurt the portfolio performance; returns were 1.4% less than if the manager invested the funds in stocks and bond indexes.
• B) Sector/security selection improved the port-folio performance by 1.4%; each sector return was higher than for index value.
• C) Sector/security selection hurt the portfolio performance; returns were 6.8% less than if the manager invested the funds in stocks and bond indexes.
• D) Sector/security selection improved the port-folio performance by 6.8%; each sector return was higher than for index return.
• E) None of the above is a true statement.

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Definitions:

Variable Production Costs

Costs that fluctuate directly with the level of output, including materials, labor, and other expenses that vary with production volume.

Fixed Cost

Expenses that remain constant in total regardless of changes in the level of production or sales volume, such as rent, salaries, and insurance.

Contribution Margin Ratio

A financial metric that shows what portion of sales revenue is available to cover fixed costs and generate profit after variable costs have been paid.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance premiums.