In a Particular Year, Roll Tide Mutual Fund Earned a Return

question 19

Multiple Choice

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



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


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

• A) 1%.
• B) 3%.
• C) 4%.
• D) 5%.

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Definitions:

Indentured Servants

Laborers who worked under a contract for a certain period of time, usually without pay but in exchange for free passage to a new country, common during the colonial period in America.

Mercantilism

An economic theory and practice dominant in Europe from the 16th to the 18th century, focusing on building a nation's wealth by exporting more than it imports and accumulating precious metals.

British Parliament

The supreme legislative body in the United Kingdom, consisting of two houses: the House of Commons and the House of Lords.

Economic Relationship

The connections between economic entities or principles, including the ways in which they interact and influence each other.