Suppose you set up the Solver in EXCEL to minimize the standard deviation of a portfolio by varying the portfolio weights on several asset classes. The only constraint you impose in the Solver is that the portfolio weights sum up to 1. There is no constraint on the expected return of the portfolio. The portfolio found by the EXCEL Solver is:

If you would like to select an active mutual fund to combine with a broadly diversified passive index fund to form your optimal risky portfolio, you should select the funds by ________; if you would like to select many actively managed mutual funds but no passive index funds to form your optimal portfolio, you would select the funds by  ________.

Some institutional investors believe that the financial market is by-and-large efficient (i.e., no significant mispricing) but they include smart beta portfolios as an important part of their investments. Their investment in smart betas is most likely guided by which of the following theories? 

In Warren Buffett’s famous 2007 bet on S&P500 vs. hedge funds, the return of the S&P500 index is compared with the return (net of fees) of a portfolio of hedge funds over a 10 year period. Which of the following, if true, may suggest that it is not appropriate to compare the performance of the S&P 500 index with that of the hedge fund portfolio simply by their returns? Please select all THREE correct answers.  

I ______ a strange noise outside my window at midnight.

She (drive) ______ to Cleveland to visit her aunt. (simple past tense)

The teacher (give) ______ us a lot of homework yesterday.

My grandmother ______ many stories about her childhood in Korea.

The children (play) ______ in the park all afternoon.

The students ______ their homework before class started.