1. Over the past 5 years the market has had an average monthly return of 1.419% and a standard deviation of 5.623%. The average monthly return on short-term government debt is 0.193%. Suppose you are a portfolio manager for a large fund that earned 2.676% on average per month with a standard deviation of 7.416%. What is the M^2 measure of performance for your fund? Please choose the option that is closest to the correct answer.

a. 0.66%

b. 1.26%

c. 0.87%

d. 0.12%

e. 0.61%

2. You observe the following yield curve for risk-free government zeros:

Years to Maturity	Yield
1	7%
2	8.5%
3	10.5%
4	12.25%
5	13.75%
10	15.5%
15	16%

What is the forward rate for 2 year debt in 3 years? Please choose the answer that is closest to the correct answer.

a. 18.81%

b. 21.40%

c. 22.99%

d. 26.33%

e. 16.25%