Answer: -0.16%

## Explanation This question tests understanding of performance attribution analysis, specifically the asset allocation component of excess return decomposition. **Key Concepts:** - **Asset Allocation Contribution**: Measures how much of the portfolio's excess return comes from the manager's decision to overweight or underweight asset classes relative to the benchmark - **Calculation**: Asset allocation contribution = Σ[(Portfolio weight - Benchmark weight) × (Benchmark return - Overall benchmark return)] **Analysis:** - The correct answer is **-0.16%**, indicating the manager's asset allocation decisions slightly detracted from overall performance - A negative contribution means the manager's allocation decisions (overweighting/underweighting certain asset classes) performed worse than the benchmark allocation - This could occur if the manager overweighted asset classes that underperformed or underweighted asset classes that outperformed **Performance Attribution Context:** - Total excess return = Asset allocation + Security selection + Interaction - Asset allocation focuses on the value added from deviating from benchmark weights - Even with good security selection, poor asset allocation can reduce overall excess returns This question assesses the candidate's ability to interpret performance attribution results and understand how different investment decisions contribute to portfolio performance.

Author: LeetQuiz .