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8. A U.S. pension plan hired two offshore firms to manage the non-U.S. equity portion of its to-… 1 answer below » 8. A U.S. pension plan hired two offshore firms to manage the non-U.S. equity portion of its to- tal portfolio. Each firm was free to own stocks in any country market included in Morgan Stanley/Capital International’s Europe, Australia, and Far East Index (EAFE), and free to use any form of dollar and/or non-dollar cash or bonds as an equity substitute or reserve. After three years had elapsed, the records of the managers and the EAFE Index were as follows: SUMMARY: CONTRIBUTIONS TO RETURN Currency Country View complete question » 8. A U.S. pension plan hired two offshore firms to manage the non-U.S. equity portion of its to- tal portfolio. Each firm was free to own stocks in any country market included in Morgan Stanley/Capital International’s Europe, Australia, and Far East Index (EAFE), and free to use any form of dollar and/or non-dollar cash or bonds as an equity substitute or reserve. After three years had elapsed, the records of the managers and the EAFE Index were as follows: SUMMARY: CONTRIBUTIONS TO RETURN Currency Country Selection Stock Selection Cash/Bond Allocation Total Return Recorded Manager A (9.0%) 19.7% 3.1% 0.6% 14.4% Manager B (7.4) 14.2 6.0 2.81 5.6 Composite of A & B (8.2) 16.9 4.5 1.71 5.0 EAFE Index (12.9) 19.9 − − 7.0 You are a member of the plan sponsor’s Pension Committee, which will soon meet with the plan’s consultant to review manager performance. In preparation for this meeting, you go through the following analysis: a. Briefly describe the strengths and weaknesses of each manager, relative to the EAFE Index data. b. Briefly explain the meaning of the data in the “Currency” column. View less » Dec 29 2015 10:57 AM