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  3. b. consider the following information regarding th

b. Consider the following information regarding the performance of a money manager in a recent...

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b. Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager's portfolio in column 1, the fraction of the portfolio allocated to each sector in column 2, the benchmark or neutral sector allocation in column in 3 and the returns of sector indices in column 4. Actual Weight 0.7 Equity Bonds Cash Actual Return 2.0% 1.0% 0.5% Benchmark Weight 0.6 0.3 0.1 Index Return 2.5% (S&P 500) 1.2% (Salomon Index) 0.5% 0.2 0.1 (i) Comment on the manager's performance [3 marks] (ii) What was the contribution of security selection to the manager's performance? [5 marks] (iii) Confirm that the sum of selection and allocation contributions equals her total excess" return. [8 marks]

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