In a Particular Year, Aggie Mutual Fund Earned a Return

question 49

Multiple Choice

In a particular year, Aggie Mutual Fund earned a return of 15% by making the following investments in the following asset classes: $\begin{array}{lcr} & \text { Weight } & \text { Return } \\\hline \text { Bonds } & 10 \% & 6 \% \\\text { Stocks } & 90 \% & 16 \% \\\hline\end{array}$ 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 contribution of asset allocation across markets to the total excess return was

• A) 1%.
• B) 3%.
• C) 4%.
• D) 5%.

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Definitions:

Smuggled

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Transit

The act or process of moving people or goods from one place to another, often referring to public transportation systems.

Equilibrium Price

The price at which the quantity of a good or service supplied matches the quantity demanded, leading to a stable market condition.

Fine Imposed

A penalty, usually in the form of a monetary payment, levied by an authority on individuals or entities as punishment for violating regulations or laws.