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%.

---

Definitions:

Rainfall Intensity

The rate at which rain falls over a given area, measured in millimeters per hour or inches per hour.

Municipal Water

Water that is treated and supplied by a municipal corporation for public use in cities and towns.

Spring Water

Water that flows naturally to the surface from a subsurface aquifer.

Bottled Water

Packaged drinking water sold in plastic or glass bottles; its quality can vary depending on the source and treatment methods.