1. The risk-free rate, S&P 500 index, and the average return, standard deviation, beta, and residual standard deviation for three funds are given. Fund Avg. Return Std. Dev. Beta Residual Std. Dev. 1.5 3.0 S&P 500 Risk- free 1. Figure out the MP measure for Fund A and B. 2. Figure out the best fund based on the information ratio. 2. Use the following table. Your Portfolio Weight 20% 80% Benchmark Portfolio Weight Return 40% 4% 60% 8% Return 6% 12% Bonds Stocks 1. Figure out your portfolio return and the total extra return. 2. Figure out the contribution of security/sector selection. 3.You buy a TIPS at issue at par for $1,000. The bond has a 6% coupon. Inflation turns out to be 2%, 3% and 4% over the next 3 years. Figure out the sum of principal and coupon payment in Year 3. 4. We have a bond with a coupon rate of 12% paid annually, 3 years to maturity, a par value of $1,000, and the yield to maturity of 10%. 1. Figure out the duration of the bond. 2. You believe that the Fed is about to increase interest rates by 60 basis points (0.6%). Figure out the percentage change in the bond price using the duration (If you cannot figure out the duration above, please use a duration of 3.)