$1.$ Imagine you have a $$400$ million portfolio that is in a private fund format. Your fund is owned by a diverse set of HNW individual investors. You value your fund monthly. You offer monthly subscriptions and redemptions. You are the CIO and have sole discretion of how to invest this fund. Your clients want to achieve a risk level that is comparable to a $60\%$ stock $($MSCI ACWI$)$ and $40\%$ bond $($Barclays Global Aggregate Bond Index$)$ mix. Please describe how you would invest this portfolio. There is no need to identify specific investments. The question is more getting at general philosophy and types of investments you would select for the portfolio.

$2.$ Jane Doe has a portfolio that is $100\%$ allocated to SPY$,$ which is an ETF that attempts to track the S&P $500.$ She is considering diversifying her exposure. Which of the following asset classes would be the best diversifier for her and why?

a$.$ REITs

b$.$ Managed Futures

c$.$ International Stocks

d$.$ High Yield Bonds

$3.$ What is the time weighted return for this account for the month of July $2017?$ The June month end value as of $6/30/2017$ was $$1,000,000.$ The July month end value as of $7/31/2017$ was $$1,050,000.$ On July $13,2017$ $$20,000$ was deposited into the account from an outside checking account at the end of the trading day. The value of the account including the $$20,000$ was $$1,040,000$ on July $13,2017.$ Show your work and carry out the return to two decimal places.

$4.$ Which description best describes what happened $($see the below scenario$)?$

a$.$ Interest rates rose

b$.$ Interest rates fell

c$.$ The yield curve flattened

d$.$ The yield curve steepened

Starting point in time:

$1$m yield: $0\mathrm{.}50\%$

$3$m yield: $0\mathrm{.}60\%$

$1$yr yield: $0\mathrm{.}90\%$

$2$yr yield: $1\mathrm{.}00\%$

$3$yr yield: $2\mathrm{.}00\%$

$5$yr yield: $2\mathrm{.}30\%$

$10$yr yield: $2\mathrm{.}80\%$

$20$yr yield: $3\mathrm{.}00\%$

$30$yr yield: $3\mathrm{.}05\%$

Ending point in time:

$1$m yield: $1\mathrm{.}50\%$

$3$m yield: $1\mathrm{.}50\%$

$1$yr yield: $1\mathrm{.}70\%$

$2$yr yield: $1\mathrm{.}70\%$

$3$yr yield: $2\mathrm{.}00\%$

$5$yr yield: $2\mathrm{.}00\%$

$10$yr yield: $2\mathrm{.}10\%$

$20$yr yield: $2\mathrm{.}00\%$

$30$yr yield: $2\mathrm{.}05\%$

$5.$ Gold is generally considered to be an inflation hedge. This is because gold$$s real returns are

a$.$ Positively correlated with inflation

b$.$ Negatively correlated with inflation

c$.$ Uncorrelated with inflation

$6.$ Consider a long call option position on shares of Walmart stock that is at the money and expires in one month. The perception of the stock suddenly changes in that investors feel there is more uncertainty about where Walmart$$s share price is likely to go over the next month. What was the likely impact on the long call option position, all else equal? Please explain why you chose the answer you chose.

a$.$ Value increased

b$.$ Value decreased

c$.$ Value did not change

d$.$ Not enough information to answer the question

$7.$ What annualized mean return would you expect from the S&P $500$ over the next ten years and why? Please express this expectation in nominal total return terms. You may provide any supporting calculations for your answer if you wish, but this is not required.