CFA Practice Question

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CFA Practice Question

When assessing the performance of a single investment fund, the asset allocation decision explains ______.
A. a little less than 100% of the level of a fund's returns
B. about 90% of the fund's variation in returns across time
C. an average of 40% of the variation in the returns of a fund across time
Explanation: Studies have shown that for a single fund, the asset allocation decision explains about 90% of the fund's variation in returns across time and more than 100% of the level of return. Across all funds, asset allocation explains an average of 40% of the variation in fund returns.

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