2. A global equity manager is assigned to select stocks from a universe of large stocksthroughout the world. The manager will be evaluated by comparing his returns to thereturn on the MSCI World Market Portfolio, but he is free to hold stocks from variouscountries in whatever proportions he finds desirable. Results for a given month arecontained in the following table:CountryU.K.JapanU.S.GermanyWeight inMSCIIndex0.150.300.450.10Manager'sWeight0.300.100.400.20Manager's Returnin Country25%20%15%5%Return of StockIndex in Country14% (FTSE100)18% (TOPIX)16% (S&P500)(DAX)12%a. Calculate the total value added of all the manager's decisions this period.Calculate the value added (or subtracted) by the manager's country allocationb.decisions. ve added for suc.Calculate the value added from the manager's stock selection ability withincountries. Confirm that the sum of the contributions to value added from his countryallocation plus security selection decisions equals total over or under performance.

Here, CountryWeight in MSCI IndexManager's WeightManager's Return in CountryReturn of Index…

2. A global equity manager is assigned to select stocks from a universe of large stocks throughout the world. The manager will be evaluated by comparing his returns to the return on the MSCI World Market Portfolio, but he is free to hold stocks from various countries in whatever proportions he finds desirable. Results for a given month are contained in the following table: Weight in MSCI Index Country 4 U.K. Japan U.S. Germany 0.15 0.30 0.45 0.10 Manager's Weight 0.30 0.10 0.40 0.20 Manager's Return in Country 25% 20% 18% 8% Return of Stock Index in Country 14% (FTSE100) (TOPIX) 18% 16% (S&P500) 12% (DAX) a. Calculate the total value added of all the manager's decisions this period. b. Calculate c. the value added (or subtracted) by the manager's country allocation the value added for attract decisions. Calculate the value added from the manager's stock selection ability within countries. Confirm that the sum of the contributions to value added from his country allocation plus security selection decisions equals total over or under performance.

2. A global equity manager is assigned to select stocks from a universe of large stocks throughout the world. The manager will be evaluated by comparing his returns to the return on the MSCI World Market Portfolio, but he is free to hold stocks from various countries in whatever proportions he finds desirable. Results for a given month are contained in the following table: Weight in MSCI Index Country 4 U.K. Japan U.S. Germany 0.15 0.30 0.45 0.10 Manager's Weight 0.30 0.10 0.40 0.20 Manager's Return in Country 25% 20% 18% 8% Return of Stock Index in Country 14% (FTSE100) (TOPIX) 18% 16% (S&P500) 12% (DAX) a. Calculate the total value added of all the manager's decisions this period. b. Calculate c. the value added (or subtracted) by the manager's country allocation the value added for attract decisions. Calculate the value added from the manager's stock selection ability within countries. Confirm that the sum of the contributions to value added from his country allocation plus security selection decisions equals total over or under performance.

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter17: Multinational Financial Management

Section: Chapter Questions

Problem 4DQ

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