- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 64. Basics of Portfolio Planning and Construction
- Subject 4. Portfolio Construction
CFA Practice Question
Over time, the major source of investment return and risk can most likely be attributed to ______.
A. stock selection
B. asset allocation
C. risk management
Explanation: The asset allocation decision explains about 90% of a fund's returns over time. Across all funds, asset allocation explains an average of 40% of the variation in fund returns, and slightly more than 100% of the average fund's level of return.
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