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 on performance of 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. The selection effect measures how individual security selection contributes to overall performance. The distribution effect measures the impact of changes to the portfolio's yield curve positioning. The diversification effect measures the impact of the portfolio's diversification on performance. The attribution effect is not a commonly used term in performance attribution analysis.

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