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Profit attribution questions

C

claire3000006

Member
In some questions sector and stock selection profits are calculated separately for each asset class and time period, sometimes they are only calculate for each time period with all asset classes lumped together, and sometimes for each asset class with all time periods lumped together. It never looks clear to me from the question what they want, so what is a goo approach?
 
Hi Claire,

The approach may differ slightly from one question to another. The wording of the question should point you down the right path, eg "Calculate... for each year..." The important point is to draw conclusions from the data in terms of stock and sector selection profits and make sure your conclusions answer the question asked.

In terms of level of detail, perhaps the number of marks could also provide a clue? If you have shown in about 2 minutes that the manager made good stock selection on equities over the 5 years, say, and the question is for 10 marks, perhaps it might be a good idea to break this down year by year. Again though, there should be something in the wording of the question that hints towards this.

Good luck!
John
 
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