Instructions

Answer the questions based on the following information.

The table below gives the details of money allocation by three Mutual funds namely, Alpha, Beta, and Gama. The return for each fund depends on the money they allocate to different sectors and the returns generated by the sectors. The last column of the table gives return for each of the sectors for a one year period.

Question 8

If the allocation of money by the fund managers to different sectors is based on the internal ranking (i.e. Sector with 1st rank gets highest allocation). Sectors with 0 allocation of money should be considered as 14th rank irrespective of the number of sectors in that category. In the light of these examine the following
statements:
I. Automobile is ranked by both Alpha and Beta as same
II. Financial is most favoured by all three Mutual Funds
III. Services is ranked by all three Mutual Funds within top 9 ranks
Select the best option:

Solution

Let us tabulate the ranks of various sectors according to fund allocation.

Statement I : Automobile is ranked by both Alpha and Beta as same. This statement is incorrect.

Statement II : Financial is most favoured by all three Mutual Funds. This statement is incorrect as Energy sector is most favored by fund Gama.

Statement III : Services is ranked by all three Mutual Funds within top 9 ranks. We can see that this statement is correct. Hence, option D is the correct answer.

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