FIN$101$ Practice Midterm $2$Instructions: Complete the following multiple choice exam to the best of your ability. You are allowed to use any calculator you would like, but you are not allowed to use your computers, any textbooks, or outside notes. There will be no partial credit, and you do not need to show work $($but it will probably help you answer the questions better if you do$).1.$ What type of portfolio management calls for holding diversified portfolios without spending effort or resources attempting to improve investment performance through security analysis?a$.$ Activeb. Passivec. Momentumd. Market$-$timinge. Bad $2.$ Purchasing an ETF never requires a front$-$end load.a$.$ Trueb. False $3.$ Which one of the following would be considered a risk$-$free asset in real terms as opposed to nominal?a$.$ money market fundb. U$.$S$.$ T$-$billc. real estated. short$-$term corporate bondse. U$.$S$.$ T$-$bill whose return was indexed to inflation Use the following information to answer questions $4-6$: $202020212022$AGG$2\mathrm{.}56\%3\mathrm{.}53\%-0\mathrm{.}05\%$VDC$6\mathrm{.}31\%11\mathrm{.}81\%-7\mathrm{.}72\%4.$ What is the arithmetic average annual return for VDC$?$a$.8\mathrm{.}61\%$b$.3\mathrm{.}47\%$c$.6\mathrm{.}12\%$d$.3\mathrm{.}13\%$e$.9\mathrm{.}69\%5.$ What is the geometric average return for AGG?a$.1\mathrm{.}48\%$b$.2\mathrm{.}00\%$c$.0\mathrm{.}39\%$d$.1\mathrm{.}22\%$e$.2\mathrm{.}53\%6.$ What is the three$-$year return for AGG?a$.6\mathrm{.}13\%$b$.4\mathrm{.}51\%$c$.7\mathrm{.}78\%$d$.5\mathrm{.}25\%$e$.7\mathrm{.}14\%7.$ Suppose that you want to have a standard deviation of $3\%$ for your portfolio. The risk$-$free rate offers a return of $2\%.$ You estimate that the SFIN$101$ Practice Midterm $2$Instructions: Complete the following multiple choice exam to the best of your ability. You are allowed to use any calculator you would like, but you are not allowed to use your computers, any textbooks, or outside notes. There will be no partial credit, and you do not need to show work $($but it will probably help you answer the questions better if you do$).1.$ What type of portfolio management calls for holding diversified portfolios without spending effort or resources attempting to improve investment performance through security analysis?a$.$ Activeb. Passivec. Momentumd. Market$-$timinge. Bad $2.$ Purchasing an ETF never requires a front$-$end load.a$.$ Trueb. False $3.$ Which one of the following would be considered a risk$-$free asset in real terms as opposed to nominal?a$.$ money market fundb. U$.$S$.$ T$-$billc. real estated. short$-$term corporate bondse. U$.$S$.$ T$-$bill whose return was indexed to inflation Use the following information to answer questions $4-6$: $202020212022$AGG$2\mathrm{.}56\%3\mathrm{.}53\%-0\mathrm{.}05\%$VDC$6\mathrm{.}31\%11\mathrm{.}81\%-7\mathrm{.}72\%4.$ What is the arithmetic average annual return for VDC$?$a$.8\mathrm{.}61\%$b$.3\mathrm{.}47\%$c$.6\mathrm{.}12\%$d$.3\mathrm{.}13\%$e$.9\mathrm{.}69\%5.$ What is the geometric average return for AGG?a$.1\mathrm{.}48\%$b$.2\mathrm{.}00\%$c$.0\mathrm{.}39\%$d$.1\mathrm{.}22\%$e$.2\mathrm{.}53\%6.$ What is the three$-$year return for AGG?a$.6\mathrm{.}13\%$b$.4\mathrm{.}51\%$c$.7\mathrm{.}78\%$d$.5\mathrm{.}25\%$e$.7\mathrm{.}14\%7.$ Suppose that you want to have a standard deviation of $3\%$ for your portfolio. The risk$-$free rate offers a return of $2\%.$ You estimate that the S

Answer all the questions and show your work step by step.