Asked by Jeremiah Starre on Jun 10, 2024
Verified
The manager of Quantitative International Fund uses EAFE as a benchmark. Last year's performance for the fund and the benchmark were as follows:
Calculate Quantitative's currency selection return contribution.
A) +20%
B) −5%
C) +15%
D) +5%
E) −10%
Currency Selection Return
The return attributed to the choice of currency in which investments are denominated.
EAFE
An abbreviation for Europe, Australasia, and Far East, representing a stock market index that gauges the equity market performance of developed markets outside of the U.S. and Canada.
Benchmark
A standard or reference by which others can be measured or judged, often used in finance to compare the performance of investments.
- Acknowledge the role and importance of international benchmarks and indexes in the appraisal of investment achievements.
Verified Answer
SG
Shenelle GabrielJun 11, 2024
Final Answer :
B
Explanation :
EAFE: (.30)(10%) + (.10)(−10%) + (.60)(30%) = 20% appreciation; Diversified: (.25)(10%) + (.25)(−10%) + (.50)(30%) = 15% appreciation; Loss of 5% relative to EAFE.
Learning Objectives
- Acknowledge the role and importance of international benchmarks and indexes in the appraisal of investment achievements.