Under the performance attribution analysis method,the ____ measures the manager's decision to over- or underweight a particular market segment in terms of that segment's return performance relative to the overall return to the benchmark.
A) Selection effect
B) Allocation effect
C) Distribution effect
D) Diversification effect
E) Attribution effect

Question

Quizplus · Accepted Answer

The allocation effect measures the impact of the manager's decision to over- or underweight a particular market segment relative to the benchmark. It measures the return performance of that segment compared to the overall benchmark return. The selection effect measures the performance of the securities selected within a market segment, while the distribution effect measures the performance of asset allocation decisions across different sectors or industries. The diversification effect measures the impact of diversification on the overall portfolio risk and return. The attribution effect refers to the overall process of assigning performance sources to particular decisions or factors.

Under the Performance Attribution Analysis Method,the ____ Measures the Manager's