1. The appraisal-based real estate index has a major problem of

a. using only comparable sales values which are stale.

b. focusing too much on future values and ignoring historical trends.

c. ignoring transactions and relying only on discounted cash flow appraisals.

d. lagging the true value of the underlying real estate market

2.

Alternative beta can be accessed through an investment in

a.

Convertible bond that has been hedged with respect to extensive beta exposures

b.

Actively managed equity mutual fund

c.

130/30 exchange traded fund

d.

ETF that invests in euro futures

3.

Barnes wants to compute the alpha on the EAF Fund for last month. He has gathered the following information:

EAF Fund Return 8.50%

Risk-Free Rate 0.15%

Beta to Benchmark 1.25

Benchmark Index Return 4.50%

Calculate EAF Funds alpha for last month:

a.

4.60%.

b.

2.91%

c.

3.25%.

d.

3.06%.

Alpha drivers do not fall into the following category:

a.

Absolute return strategies

b.

Nonlinear return processes

c.

Enhanced index products

d.

Concentrated portfolios