Exhibit 18-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 58

Multiple Choice

Exhibit 18-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $$\begin{array}{c}\text { Weights }\\\begin{array} { c c } \text { Palicy } & \text { Actual } \\\hline 50 \% \text { stacks } & 60 \% \text { stacks } \\50 \% \text { bonds } & 40 \% \text { bonds } \\ \quad \quad \quad \quad\text { Retunns } \\\text { Index } & \text { Actual } \\\hline \text { g\% 5tacks } & 9 \% \text { 5tacks } \\5 \% \text { bonds } & 7 \% \text { bonds }\end{array}\end{array}$$
-Refer to Exhibit 18-8. Which of the following statements is true?

• A) The portfolio manager earned an extra 0.3% because of a shift in allocation out of bonds and into stocks.
• B) The portfolio manager earned an extra 0.3% because of a shift in allocation out of stocks and into bonds.
• C) The portfolio manager earned an extra 6.5% because of a shift in allocation out of bonds and into stocks.
• D) The portfolio manager earned an extra 6.5% because of a shift in allocation out of stocks and into bonds.
• E) None of the above.

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Definitions:

Cycle Inventories

are stocks that companies maintain to smoothly handle the fluctuations in production and sales, minimizing stockouts and overstock situations.

Setups

The preparation and adjustments made to machinery or equipment before a production run or the execution of a particular job.

Economic Order Quantity

A calculation used to determine the most efficient order size that minimizes the sum of ordering and holding costs associated with inventory management.

Holding Costs

Expenses associated with storing inventory, including warehouse storage fees, insurance, and spoilage costs, until the inventory is sold or used.