In a Particular Year, Aggie Mutual Fund Earned a Return

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%.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free