CFA Practice Question

There are 136 practice questions for this study session.

CFA Practice Question

Consider the following benchmark and managed portfolio.

What is the value added from the asset allocation decision?

A. 0.45%
B. 2.00%
C. 2.45%
Correct Answer: A

ΔwstocksRB, stocks + Δwbonds RB, bonds = (0.75 - 0.7) x 12% + (0.25 - 0.3) x 3% = 0.45%

User Contributed Comments 1

User Comment
evanfitz Therefore, the value added from the security selection is 2.00%, since the total active return exceeded the benchmark return by 2.45%.
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