Forward-looking security attribution focuses on identifying potential future risks in a portfolio by analyzing market trends, economic indicators, and security performance forecasts.
Why is Option B Correct?
Investment managers use quantitative models and stress testing to identify upcoming risks.
Helps in adjusting asset allocation and implementing hedging strategies.
Why Not Other Options?
A (Calculate future profits) → Attribution focuses on performance breakdown, not profit forecasting.
C (Quantify annual charge) → Fees are predetermined and not part of attribution analysis.
D (Outperform benchmark) → Attribution measures risk sources, not outperformance targets.
???? Reference: CFA Institute (Performance Attribution), CISI Wealth & Investment Management.
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