Hi guys,

For the after-chapter question of Mel Rojas on Reading “Execution of Portfolio Decisions”, I don’t understand why the $96 commission was not included in calculation of DAM’s implementation shortfall. Could someone please help? Thanks.

Hi guys,

For the after-chapter question of Mel Rojas on Reading “Execution of Portfolio Decisions”, I don’t understand why the $96 commission was not included in calculation of DAM’s implementation shortfall. Could someone please help? Thanks.

What $96? Can you please specify …

I’ll write down a simplified version of the method I use to calculate IS:

(Total number of shares x last closing price ) - (total number of shares x benchmark price) = x

(Total number of shares bought x last closing price ) - (sum of number of shares bought x price + fees) = y

IS = x - y

from what I recollect if im nt mistaken I think this there in the errata… pls check it once

I don’t have it in front of me but, are you sure the question didn’t ask for implicit costs. Meaning excluding the explicit costs of commission. I thought I remembered that somewhere in that problem set.