In a Particular Year, Aggie Mutual Fund Earned a Return

question 47

Multiple Choice

In a particular year, Aggie Mutual Fund earned a return of 15% by making the following investments in the following asset classes: $$\begin{array} { | l | l | l | } \hline & \text { Weight } & \text { Return } \\\hline \text { Bonds } & 10 \% & 6 \% \\\hline \text { Stocks } & 90 \% & 16 \% \\\hline\end{array}$$ The return on a bogey portfolio was 10%, calculated as follows: $$\begin{array} { | l | l | l | } \hline & \text { Weight } & \text { Return } \\\hline \text { Bonds (Lehman Brothers Index) } & 50 \% & 5 \% \\\hline \text { Stocks (S\&P 500 Index) } & 50 \% & 15 \% \\\hline\end{array}$$
-The contribution of selection within markets to total excess return was

• A)1%
• B)3%
• C)4%
• D)5%
• E)none of the above

---

Definitions:

Typical Entrepreneur

Someone who sets up and runs business ventures, facing more significant financial risks than typically expected.

Careful Examination

A diligent and thorough inspection or analysis of an object, document, or situation to ascertain its condition or validity.

Perseverance

The quality of persistence and determination in doing something despite difficulty or delay in achieving success.

Technical Skills

Specific abilities and knowledge required to perform certain tasks, often related to technological or scientific fields.