Portfolio Positions, Risk Limits, and Performance Attribution

1.A benchmark holds a stock at 4%. You want an active overweight of 1.5 percentage points. What target weight expresses that view?

2.You expect a benchmark stock to underperform, but the mandate is long-only. Which target expresses the view without borrowing stock?

3.A $250 million fund wants to raise a stock's weight from 2% to 3.2%. Ignoring price moves and costs, what additional market value should it buy?

4.A manager expects a specific issuer's credit spread to tighten but has no view on government yields. What position best isolates the thesis if the mandate permits it?

5.A policy fund has strategic weights of 60% equity and 40% bonds. The manager wants a temporary equity overweight without changing strategic policy. Which implementation fits?

6.An equity manager wants to express a view on one retailer's improving margins. The cheapest instrument is a broad consumer ETF dominated by unrelated businesses. What is the principal trade-off?

7.A $100 million account has $3 million in a target stock and wants $6 million. The fund is fully invested and cannot borrow. What decision belongs with the buy?

8.Two research ideas offer similar expected upside. One depends on the same commodity shock as existing holdings. What differentiates them for this portfolio?

9.A view depends on a court decision expected in four months. A cheaper option expires in six weeks. What matters when choosing the instrument?

10.A fund wants to reduce market beta without selling preferred stock holdings. Short index futures are allowed. What residual risk should the manager describe?

11.A manager expects a modest rise in an index and wants a payoff with limited loss and capped upside. The mandate allows options. Which expression fits?

12.A global fund is bullish on a foreign company's local business and wants to reduce direct currency exposure. What choice best separates the views?

13.A long-short book wants to express an issuer-specific view using a peer as the short. What should it test before choosing equal dollar legs?

14.A market-neutral strategy depends on maintaining a single-name short for six months. What should be checked before implementation?

15.A bond manager is bullish on the five-year part of a curve relative to the long end. Which exposure better expresses the relative view?

16.A stock offers 25% upside to a target, but the manager estimates that costs and a slow exit could absorb much of it at intended size. What should guide implementation?

17.A fund's thesis is that one bank will gain market share. The stock's recent rally already reflects a large gain in consensus forecasts. What should the manager check before buying?

18.A model recommends buying an issuer at a 4% weight, but the investable list temporarily excludes it. What action fits the mandate?

19.A manager has a strong 12-month view but the stock is unusually expensive to trade this week. The catalyst is months away. What is a reasonable implementation choice?

20.A $200 million fund has a 15% sector weight versus 18% in its benchmark. How much would it buy to eliminate the underweight, assuming NAV stays fixed?

21.A portfolio holds 8% in a sector versus 10% in its benchmark. You want to become 1 percentage point overweight. How much should the sector weight rise?

22.A fund uses liquid futures to obtain temporary equity exposure while cash inflows await investment. What should the portfolio report track?

23.A manager wants to own an attractive issuer but can choose between its bonds and stock. The downside involves a refinancing failure. Which comparison is most useful?

24.A portfolio manager expects higher long-term yields to hurt several equity holdings but wants to keep the security selections. What trade best targets the suspected driver if approved?

25.A thesis depends on an earnings inflection, but this quarter's news gives mixed evidence. How can a manager express partial conviction?

26.A manager owns a stock that reaches the original fair value before its catalyst. What should guide the new weight?

27.A portfolio manager wants a bearish view on a company in a benchmark-neutral sector allocation. Which change best preserves the sector weight?

28.A fund wants to add bond duration but has limited room for additional credit risk. Which eligible instrument most directly fits?

29.A manager expects oil prices to rise but is considering an airline stock as the expression. Which diligence is most important?

30.A manager starts with a 2% position on a three-month catalyst and decides in advance to reconsider if it is delayed. The catalyst slips six months. What response follows the plan?

31.A fund is evaluating two ways to obtain similar index exposure, a cash ETF and futures. What comparison best informs the choice?

32.A stock has a 12% expected return while the position you would sell to fund it has a 9% expected return over the same horizon. Ignoring costs, what is the expected incremental portfolio return from switching 4% of NAV?

33.A view on inflation is already expressed through commodity futures, inflation-linked bonds, and a value-equity tilt. Before adding a fourth instrument, what should the manager show?

34.A balanced portfolio considers moving 5% of NAV from government bonds to credit. What should the trade ticket's investment rationale make explicit?

35.An account benchmarks against a broad index but excludes a large constituent. How should the manager incorporate this into portfolio decisions?

36.A manager pitches an overweight in a cyclical company whose recovery is not yet evident. Which note ties the position to a decision rule?

37.A $120 million fund caps a single issuer at 5% of NAV across equity and debt. It holds $4.2 million of the issuer's bonds and $900,000 of stock. How much more can it buy before the cap, assuming fixed NAV?

38.A stock's benchmark weight is 2.5%. The mandate caps active overweights at 2 percentage points and total weights at 4%. What is the largest permitted position?

39.A portfolio can lose at most 40 bp of NAV from a new position in a stated stress. The security loses 25% in that scenario. Ignoring other effects, what is the maximum weight?

40.A proposed 4% position would fall 30% in the fund's stress. Other holdings already lose 2.4% of NAV in the same scenario and the portfolio loss cap is 3%. What maximum weight can the new position have if funding effects are zero?

41.A stock already contributes $18,000 of P&L per 1% sector move. The cap is $25,000 and another $1 million invested would add $4,000 of exposure. What is the maximum additional allocation if exposure scales linearly?

42.A desk is long 90% of NAV and short 35%. The mandate allows up to 140% gross and 65% net long. How much can it add to longs if shorts and NAV stay fixed?

43.A fund wants to hold 300,000 shares and limits sales to 10% of normal daily volume of 200,000 shares. How many trading days would a full exit require at that rate?

44.A 4% weight in a small company fits the issuer limit but would take 20 trading days to exit at the fund's stressed participation rate. The liquidity policy caps stressed exit time at five days. What follows?

45.A $300 million fund expects $15 million of near-term redemptions and requires a separate $6 million margin buffer. It has $25 million of cash. What cash can it deploy if both reserves must stay intact?

46.A concentrated holding rises from 4% to 6.2% of NAV without a trade. The hard cap is 6% and policy covers passive breaches. What should the manager do?

47.Two strategies each meet their stand-alone risk targets. Their recent stress losses overlap. What should a manager check before combining them at full size?

48.A position consumes little tracking error in a calm covariance estimate but dominates losses in a plausible funding shock. What should determine its size?

49.One position is 2% of capital but accounts for 20% of forecast portfolio volatility under the risk model. What does this show?

50.A low-volatility stock is highly correlated with the portfolio's largest risk driver. A more volatile stock has low correlation with that driver. Which comparison best informs sizing?

51.A position is constrained by both a 3% issuer cap and a sector cap with only 1% of NAV of headroom. Which size can be added without selling another position?

52.A proposed bond purchase adds $9,000 per bp of DV01. Current net DV01 is $42,000 per bp and the cap is $48,000 per bp. How much of the planned purchase fits if sensitivity scales with size?

53.A fund is near its net equity beta limit. Selling an index future would reduce beta but increase gross exposure and margin use. What must the trade approval show?

54.A manager wants to scale a profitable 1% position to 4%. Why might the fourfold increase fail the original trade economics?

55.A 2% position has a 15% modeled downside. The manager claims an ordinary stop order limits any loss to 30 bp of NAV. What should the risk review add?

56.A fund sets a maximum of 10% active weight across a theme. It is already 8% overweight after aggregating direct holdings. A proposed 3% ETF position adds 1.5% of NAV of effective theme overweight. Where would usage land?

57.A stock's estimated risk rises after an earnings warning, even though its weight falls on the price decline. What should govern resizing?

58.A manager must cut $8 million of risk assets by tomorrow. The largest position is thinly traded and the smallest can be sold quickly. What should the manager compare?

59.A forecast optimizer assigns 18% to one stock because its expected return estimate is slightly above peers. Which change addresses estimation sensitivity directly?

60.A fund can implement a view with either a 3% cash position or a levered derivative using 0.5% of NAV in initial margin for the same delta. How should size be compared?

61.A position is expected to add 8 bp of active return and 12 bp of forecast tracking error on a marginal basis. A competing trade adds 7 bp of expected return and only 4 bp of incremental tracking error. What is the better comparison when active risk capacity is scarce?

62.A new position's modeled worst scenario loses $1.4 million. The manager has $900,000 of remaining loss capacity in that scenario. Assuming a linear loss and unchanged other positions, what fraction of the proposed size fits?

63.A fund has a narrow sector band and expects a benchmark rebalance to increase its reference sector weight. What should the manager check before trading today?

64.A strategy has a two-week signal horizon, but one target name requires six weeks to enter and exit at permitted participation. What is the sizing implication?

65.A fund is at 94% of a hard exposure limit before an illiquid event. Which sizing decision can reduce the chance of a passive breach if the manager still wants exposure?

66.A stock hedge reduces the portfolio's modeled normal volatility. It requires borrow that could be recalled in the same market stress it is meant to hedge. What should sizing include?

67.A bond manager has ample duration headroom but is close to the credit sector loss cap. A higher conviction issuer lies in that sector. What is a feasible way to fund it?

68.A fund has a 100% gross target, 103% gross currently, and a hard maximum of 110%. It proposes a pair adding 4% long and 4% short. What is the resulting gross usage?

69.A fund holds 45,000 shares and has an open buy for 15,000. Its position cap is 65,000 shares including open buys. What additional order fits if the existing buy can fill in full?

70.A manager's risk estimate uses last month's volatility for a name about to face a binary ruling. Which method best supports sizing?

71.A portfolio has a stress-loss cap of 2% of NAV. A trade adds 0.5% of NAV of loss in that scenario, but the funding sale removes 0.3%. Existing loss is 1.9%. What is the proposed result?

72.A manager plans to trim a position over three days. A limit breach exists now, and the intended sells could partially fill. What should the manager report until the reduction is verified?

73.A portfolio earns 4.3% while its benchmark earns 5.1% over the same period. What is arithmetic active return?

74.A holding starts the month at 6% of NAV and returns 12%. There are no trades or external flows. What is its contribution to absolute portfolio return?

75.A portfolio and benchmark both allocate 20% to health care. The portfolio's health care names earn 7% and the benchmark sector earns 4%. What is the sector's selection effect using benchmark weight times return difference?

76.A fund is 5 percentage points overweight a sector that returns 9%. The total benchmark returns 4%. Under Brinson–Fachler, what is the sector's allocation effect?

77.A fund is 4 percentage points underweight a sector. Its holdings in that sector beat the benchmark sector by 3 percentage points. What is the Brinson interaction effect?

78.A Brinson report shows +30 bp allocation, −15 bp selection, and +5 bp interaction. What is total explained arithmetic active return?

79.A portfolio returned −3% while its benchmark returned −6%. How should a manager summarize the result?

80.A portfolio's utilities sleeve earns 2%, but the overall benchmark earns 6% and the utilities benchmark also earns 2%. The portfolio overweighted utilities. Under Brinson–Fachler, what hurt relative performance in that sleeve?

81.A portfolio's largest absolute contributor is a stock that rose 20%. Its weight exactly matches the benchmark, and the benchmark holds the same stock over the period. What is its direct active contribution on a simple holdings basis?

82.A global holding gains 10% in local currency while that currency falls 8% against the portfolio currency. What is the unhedged return in the portfolio currency, ignoring costs?

83.A currency-hedged overseas sleeve lags its local equity index despite matching the stocks. Which components should the report check?

84.A fund's duration is longer than its benchmark's. Yields decline, spreads are stable, and the longer duration adds relative return. How should the gain be described?

85.A bond portfolio beats its benchmark after credit spreads tighten and the manager's issuer weights match the benchmark. The portfolio holds longer spread duration in those issuers. What driver deserves credit?

86.A fund outperforms because a market beta tilt paid off in a rally, while stock-specific contributions are negative. Which explanation fits?

87.A manager bought a stock after it rallied early in the month. The stock's full-month return was 15%, but it was flat after purchase. Why would applying ending weight to the full-month return misstate contribution?

88.A fund has reported active return of +18 bp. Attributed effects sum to +28 bp before including −6 bp of fees and −4 bp of transaction costs. How should the report reconcile?

89.A policy committee wants to evaluate a manager independently of client-directed cash flows. Which measure best isolates investment performance from flow timing?

90.A fund earns +5% in month one and −5% in month two. What is its linked two-month return?

91.A portfolio earns 10% and then 0%, while its benchmark earns 0% and then 10%. What is arithmetic active return across the full two-period horizon?

92.A team adds monthly attribution contributions and compares the total with geometrically linked annual portfolio and benchmark returns. A gap remains. What should it review first?

93.A manager wants to report why a trade lost money after the company beat earnings expectations. Which comparison is most informative?

94.A diversified fund held 10% cash at zero return while its fully invested equity benchmark rose 8%. Assume the invested 90% matched the benchmark. What was the active effect of the cash position?

95.A manager purchased shares at $25.10 against an arrival price of $25.00. The fill was for 50,000 shares and fees were $1,000. What was execution shortfall on the filled amount?

96.A portfolio's attribution does not reconcile to its reported return. Trades and benchmark weights were imported from different valuation dates. What should the analyst do first?

97.A manager's decision review compares the result of an overweight with the asset it was funded from. Why is that useful?

98.A long position gains $420,000 while its designated hedge loses $150,000. Fees on both legs are $20,000. What is the net contribution in dollars?

99.A fund used an index hedge to protect against a drawdown. The market rallied and the hedge lost money while the holdings gained. What should the performance discussion include?

100.A portfolio's annualized active return is 1.8% and annualized tracking error is 3%. What is its information ratio using these inputs?

101.A fund earns 8% with annual volatility of 10% and a 2% risk-free return. What is its Sharpe ratio using these annual inputs?

102.A portfolio's NAV peaks at 120 and later falls to 102 before recovering to a new high. If this was the largest peak-to-trough decline, what was maximum drawdown?

103.A fund outperforms a broad stock benchmark, but the mandate is a small-cap value portfolio. What should you verify before calling the excess return manager skill?

104.A manager attributes a quarter's gains to a thesis about earnings growth. A factor model instead shows a large value-factor rally and little residual gain. What is a responsible conclusion?

105.A risk report says one holding contributed 25% of predicted variance, but it produced little realized return. Why can both statements be true?

106.A fund falls 2.0% and its benchmark falls 2.5%. Attribution shows +70 bp from allocation, −30 bp from selection, and +10 bp from other effects. Which client summary reconciles the numbers?

107.A manager's investment thesis played out, but the position was kept small due to a binding liquidity limit. The fund barely benefited. What should the review distinguish?

108.A manager credits a quarterly active gain to one successful overweight. Attributed results show +24 bp from it, −18 bp from other stock selection, +9 bp from allocation, and −5 bp from costs. What is the most accurate summary?