Question

folio olio, 1. The following are examples of Style Indexes a. Small-cap growth b. Mid-cap value C. Small-cap value d. All of the above e. None of the above 32. The implication of efficient capital markets and a lack of superior analysts have led to the introduction of a. Balanced funds. b. Naive funds. c. January funds. d. Index funds. e. Futures options. 33.The Investment Advisors Act of 1940 a. Contains various anti-fraud provisions and record keeping and reporting requirements for fund advisors. b. Regulates broker-dealers. c. Requires federal registration of all public offerings of securities. d. Regulates the structure and operations of mutual funds. e Contains a code of ethics and standards of professional conduct. USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Asset (A) Asset (B) E(RA) = 10% E(RB) = 15% STDevA= 8% STDev B = 9.5% WA = 0.25 WB = 0.75 CovA,B = 0.006 expected return standard deviation portfolio weights covariance Refer to Exhibit7.1. What is the expected return of a portfolio of two risky assets if the expected return E(RI), standard deviation (StDev), covariance (COV..), and asset weight (W) are as shown above? d. 34 What is the portfolio's Expected Return? a. 8.79% b. 12.5% 13.75% 7.72% 12% 35. What is the standard deviation of this portfolio? 8.79% 13.75% 12.5% 7.72% 5.64%

Answer 1

31]

Style indexes can be in relation to type of stock (large-cap, mid-cap, small-cap etc.) or in relation to type of investment (value, growth, income etc.) and any combination of these.

All of the options are examples of style indexes.

The answer is (d)

32]

If markets are efficient, it is not possible to earn superior risk-adjusted returns either by technical analysis, fundamental analysis, or access to better information. Thus, it is better to invest passively so that expenses are kept low, and resources are not wasted in active management. Passive investment is when the portfolio tracks a widely followed index.

The answer is (d)