In a Particular Year, Aggie Mutual Fund Earned a Return

question 60

Multiple Choice

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

• A) 1%.
• B) 3%.
• C) 4%.
• D) 5%.

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Definitions:

Greater Expertise

A high level of skill or knowledge in a particular area, acquired through education, practice, and experience.

Nonexperts

Individuals who do not have specialized knowledge, training, or skill in a particular area or subject.

Affective Component

Part of an attitude related to emotion and feeling, influencing how individuals feel about an object, person, or situation.

Situational

Pertaining to or dependent upon the context or specific circumstances in which an event occurs.