1. A fund manages a $2.2 billion equity portfolio with a beta of .55. If the S&P contract multiplier is $250 and the index is currently at 1,000, how many contracts should the fund sell to make its overall position market neutral?

Number of contracts:

2.You are considering investing in a no-load mutual fund with an annual expense ratio of .6% and an annual 12b-1 fee of .75%. You could also invest in a bank CD paying 6.0% per year. What minimum annual rate of return must the fund earn to make you better off in the fund than in the CD?

7.35%

8.40%

6.75%

6.60%