LOS 47e Multi- period Performance Evaluation topic, period

cjs238

This topic area is extremely confusing. What is the real importance of this topic area. I seem to be missing that.

mar350

Break it down into two learning sections. One where you learn the market , security, and currency returns. And the other where you have to calculate the returns relative to a benchmark portfolio. The benchmark comparisons are a little tougher and less intuitive. I find it helpful on those to repeat "MWWR and SWRR" over and over again.

Market Allocation Effect= Wi-Wb (Return i)
Security Allocation Effect= wi (Returni -Return B)
Currency i cant find an easy way to remember but after doing 3-4 of these you get into a rhythm.

IMHO i would not skip out on this section. This seems like an area with a ton of testable material even in essay form.

PalacioHill

Skip- I think cfahead is talking about the tail end of the reading.

The key point of the multi-period section is-- you can't just add or even chain-link the attribution contributions ever. There are two correct ways to do it

first method is S1* (1+R2(bench)) + S2*(1+R1(portfolio))

Quiz: anyone want to share the second method?



Edited 1 time(s). Last edit at Sunday, May 8, 2011 at 11:14PM by jbaphna.

Analyze_This

Guys this whole section won't be more than 5% (according to Schweser Secret Sauce, which- should be taken with a grain of salt).