In a Particular Year, Razorback Mutual Fund Earned a Return

In a particular year, Razorback Mutual Fund earned a return of 1% by making the following investments in asset classes: $\begin{array}{lcc} & \text { Weight } & \text { Return } \\\hline \text { Bonds } & 20 \% & 5 \% \\\text { Stocks } & 80 \% & 0 \% \\\hline\end{array}$ The return on a bogey portfolio was 2%, calculated from the following information. $\begin{array}{lrrr} & & \text { Weight } & \text { Return } \\\text { Bonds (Lehman Brothers Index) } & 50 \% & 5 \%\\\text { Stocks (S\&P } 500 \text { Index) } & 50 \% & -1 \% \\\hline\end{array}$ The contribution of asset allocation across markets to the Razorback Fund's total excess return was

A) -1.80%.
B) -1.00%.
C) 0.80%.
D) 1.00%.

Correct Answer:

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