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  • Test CAT 4

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    David Ongeri
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    Fund A outperformed the market and treasury bills rate from 2010-2014, with returns ranging from -6% to 22%. Fund B underperformed the market in 2011 but outperformed treasury bills each year, with returns ranging from -2% to 13%. A portfolio with equal distribution of Funds A and B would have benefited from their overall higher returns compared to the market and lower risk than investing solely in Fund A. However, the management of Fund B could be improved based on its underperformance relative to Fund A and the market in some periods.

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    Fund A outperformed the market and treasury bills rate from 2010-2014, with returns ranging from -6% to 22%. Fund B underperformed the market in 2011 but outperformed treasury bills each year, with returns ranging from -2% to 13%. A portfolio with equal distribution of Funds A and B would have benefited from their overall higher returns compared to the market and lower risk than investing solely in Fund A. However, the management of Fund B could be improved based on its underperformance relative to Fund A and the market in some periods.

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    13 views1 page

    Test CAT 4

    Uploaded by

    David Ongeri
    Fund A outperformed the market and treasury bills rate from 2010-2014, with returns ranging from -6% to 22%. Fund B underperformed the market in 2011 but outperformed treasury bills each year, with returns ranging from -2% to 13%. A portfolio with equal distribution of Funds A and B would have benefited from their overall higher returns compared to the market and lower risk than investing solely in Fund A. However, the management of Fund B could be improved based on its underperformance relative to Fund A and the market in some periods.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Question one: For the following period, the return of 2 funds and a market as well as treasury

    bills rate were projected as bellow


    Fund A% Fund B% Kongoni stock Treasury Bills
    Market
    2010 15 10 11 6
    2011 -6 -2 -5 5
    2012 17 13 12 7
    2013 18 9 11 6
    2014 22 11 13 7
    Comment on the performance and valuation of each fund using CAPM. Discus your result to
    guide the management on each fund. What would be the implication in a portfolio with equal
    distribution of the funds? [20 marks]

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