Let's solve each step by step. --- ## A) **Security Selection Ability for Stocks** ### **Step 1: Calculate the Security Selection Ability** **Formula:** \[ \text{Security Selection Ability} = \text{Fund Return} - \text{Benchmark Return} \] For **Stocks**: - Fund Return = 12.00% - Benchmark Return = 11.00% \[ \text{Security Selection Ability for stocks} = 12.00\% - 11.00\% \] ### **Explanation:** This measures how much better (or worse) the fund manager performed with stock selection compared to the benchmark for stocks. --- ### **Step 2: Compute the Value** \[ \text{Security Selection Ability for stocks} = 1.00\% \] **Final Answer:** The security selection ability for stocks is **1.000%**. --- ## B) **Security Selection Ability for Bonds** ### **Step 1: Calculate the Security Selection Ability** **Formula:** \[ \text{Security Selection Ability} = \text{Fund Return} - \text{Benchmark Return} \] For **Bonds**: - Fund Return = 3.50% - Benchmark Return = 3.00% \[ \text{Security Selection Ability for bonds} = 3.50\% - 3.00\% \] ### **Explanation:** This tells us how much better (or worse) the fund manager performed in bond selection compared to the benchmark for bonds. --- ### **Step 2: Compute the Value** \[ \text{Security Selection Ability for bonds} = .50\% \] **Final Answer:** The security selection ability for bonds is **.500%**. --- ### **Summary Table** | Asset Class | Security Selection Ability (%) | |-------------|-------------------------------| | Stocks | 1.000 | | Bonds | .500 |