Question

Consider the following information regarding the performance of a money manager in a recent month. The table

Answer 1

a-1. The manager's return in the month, based on the performance table information, is 1.38%.

a-2.  The manager's underperformance is 0.51% (1.89 - 1.38).

What is a manager's underperformance?

A manager's underperformance occurs when the manager delivers results below expectation.

For instance, the weighted benchmark return was expected to be 1.89%, but the manager achieved an actual weighted return of 1.38%.

Data and Calculations:

                     (1) Actual    (2) Actual   (3) Benchmark   (4) Index

                         Return        Weight           Weight     Return

Equity                  2.2%         0.4                  0.5                 2.7% (S&P 500)

Bonds                  1.1             0.2                  0.2                  1.5 (Barclays Aggregate Bond index)

Cash                    0.7          0.4                   0.3                  0.8

                     (1) Actual    (2) Actual   Weighted

                         Return     Weight       Returns

Equity                  2.2%         0.4            0.88%

Bonds                  1.1             0.2            0.22

Cash                    0.7          0.4              0.28

Weighted Returns =                             1.38%

                      Benchmark   (4) Index                   Weighted

                            Weight        Return                   Benchmark

Equity                  0.5                 2.7% (S&P 500)    1.35% (0.5 x 2.7)

Bonds                  0.2                  1.5 (Barclays       0.30 (0.2 x 1.5)

Aggregate Bond index)

Cash                    0.3                  0.8                      0.24 (0.3 x 0.8)

Weighted Benchmark Return =                            1.89%

Thus, there was a comparative underperformance of 0.51%.

Learn more about management performance indices at brainly.com/question/26717041

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