We live in a world where there are many risky assets and a risk free asset. Describe the efficient frontier on the mean standard deviation graph – what does it mean to be on the efficient frontier. Explain in detail how each point on the efficient frontier is constructed (i.e. if you told Excel Solver to construct the EF for you, what is it doing behind the scenes to construct the curve). (4 points)

EXTRA CREDIT: Your portfolio manager tells you that they delivered 15% last year. You follow up with the portfolio manager and ask them for two years of performance data which they give you. You take the data from year t-2 to year t-1 and run the following regression: Ri = Rf  + βmRm + βsmbRsmb + βhmlRhml   And you find that:           βm = 1.10      βsmb = 1.2      βhml = 0.80 Using the following returns from year t-1 to year 0: Rf =  0         Rm = .12      Rsmb =  .01      Rhml =   .02      Did the portfolio manager actually do well over yr t-1 to 0-  what were their FF adjusted returns? According to the Beta coefficients, what types of risk is the manager primarily taking?  (3 points)      

The optimal risky portfolio can be identified by finding ____________. I. the minimum variance point on the efficient frontierII. the maximum return security  III. the tangency point of the capital market line and the efficient frontierIV. the line with the steepest slope that connects the risk free rate to the efficient frontier 

Ray Dalio’s main reason to dislike the pod shop method of structuring a hedge fund is because:

The risk-free rate, average returns, standard deviations, and betas for three funds and the S&P 500 are given below. What is the Sharpe measure for portfolio C? 

If the simple CAPM is valid, is the situation detailed below possible? Explain in a few short sentences.  (4 points)   Portfolio                                              Expected Return                                             Std Dev Risk-free                                             10                                                                    0% Market                                                30%                                                                 28% A                                                         22%                                                                 20% _________________________________________________________________________ 

Investors who want to liquidate their holdings in a closed-end fund may _________________.

You pay $21,600 to the Laramie Fund, which has a NAV of $18 per share at the beginning of the year. The fund deducted a front-end load of 3%. The securities in the fund increased in value by 7% during the year. The fund’s expense ratio is 2% and is deducted from year-end asset values. What is your rate of return on the fund if you sell your shares at the end of the year? 

Describe how essential and non-essential amino acids are different.

Describe two of the guidelines for lowering the LDL cholesterol.