Question

Under the performance attribution analysis method, the ____ measures the manager's ability to form specific market segment portfolios that generate superior returns relative to theway in which the comparable marke t segment is defined in the benchmark portfolio weighted by the manager's actual market segment investment proportions.

a.Selection effect
b.Allocation effect
c.Distribution effect
d.Diversification effect
e.Attribution effect

Answer 1

b.Allocation effect

Step-by-step explanation:

• Measuring the ability of an investment manager to allocate the assets of a portfolio to different segments.
• The allocation effect determines whether an account has a negative or positive contribution to total returns under overweight or sector weights.