A manager prepares risk and return information for three different funds:

If an investor's risk aversion is $8,$ then the fund with the highest utility for that investor is most likely?

A$.$ Fund $1$

B$.$ Fund $2$

C$.$ Fund $3$

A mid$-$cap portfolio has the following performance this past year:

The M$-$squared value for the portfolio is closest to:

A$.11\mathrm{.}57\%$

B$.15\mathrm{.}91\%$

C$.20\mathrm{.}40\%$

Which of the following would least likely be considered a minimum requirement of an IPS? $A(n)$ :

A$)$ benchmark portfolio.

B$)$ investment strategy based on client circumstances and constraints.

C$)$ target return figure.

If an investor wants a portfolio with the highest return possible and the same risk as the global minimum

variance portfolio, then the investor most appropriately:

A$.$ combines the risk$-$free asset and the optimal risky portfolio.

B$.$ lends the optimal risky portfolio and buys the risk$-$free asset.

C$.$ borrows the risk$-$free asset and buys the global minimum variance portfolio.

A firm that invests the majority of a portfolio to track a benchmark index, and uses active investment

strategies for the remaining portion, is said to be using:

A$)$ strategic asset allocation.

B$)$ a core$-$satellite approach.

C$)$ risk budgeting.

Which of the following is an assumption of the capital asset pricing model $($CAPM$)?$

A$.$ Investors use different estimates to value assets.

B$.$ Analysts independently appraise a company's price.

C$.$ Market participants use the same economic expectations.