1. Your alpha forecasts are positive for many stocks within Energy sector, and neutral for others within the sector. You have no forecast (positive or negative) on the Energy sector in general.

(a) Explain how to best allocate your bets within Energy sector and why.

(b) How will performance attribution help validate the effectiveness of your implementation?

2. You forecast that Technology sector will underperform the overall benchmark, but are indifferent to individual stocks within Technology.

(a) Describe how to best allocate your bets within Technology sector and why.

(b) How will performance attribution help validate the effectiveness of your implementation?

3.

In your own words, briefly compare and contrast the three-portfolio management theories:

a) Modern Portfolio Theory by Markowitz

b) Active Portfolio Management by Grinold & Kahn

c) Equilibrium Approach by Black-Litterman