Global Performance Evaluation

Page 213 Volume 6. Solution to Question 1 in Period 2, Market Allocation = .05 ( 10%-12.5%) -.05(15%-12.5%). My question is… where is .05 given? How they have come up this .05? and why they have multiplied by .05?

Thanks in advance…

0.05 and -0.05 are the Return in Local currency for the Japanese and European Index( Benchmark ) . See page 205

I’m having trouble with these GPE end of chapter questions. I have to work through these logically and it takes me a very long time and and a lot of paper to work out local ccy return, return from stock selection etc…

If there are a couple of these on the exam, that will take up most opf my time!

relax and study the question , it will come to you if you carefully check what they’re asking and work through the question . They wil not ask you to do a complete analysis only specific calculation to check if you know the process.

See exam of 2011 Q 9 , that isn’t GPE but perf. attribution but it gives a picture of how they may test your knowledge

Page 213 Volume 6. Solution to Question 1 in Period 2, Market Allocation = .05 ( 10%-12.5%) -.05(15%-12.5%). My question is………… where is .05 given? How they have come up this .05? and why they have multiplied by .05?

I got one part of this but having prob. in brackets terms now:-

.05 is the weight difference of Portfolio relative to Benchmark. On page 205 both results r negative but here one is positive, in my opinion this is not the same as page 205 bcz initially i also thought the same. However, I am having problem in Brackets terms as well because Mkt Allocation Effect is the diifrence in weights of Portfolio relative to the Benchmark multiplied by the Return on Market in Foreign currency not the difference of market return in base cuurency and overall portfolio return in base currency as it is done in the example.