Answer both parts of the question. Clearly label your response to each part.

a) A fund with a beta () of 1.3 generated a return (R_i) of 20% over the past year. In the same period, the market rate of return (R_m) was 15% while the return on the risk-free asset (R_f) was 5%. Based on this information, determine whether the fund can say that it outperformed the market on a risk adjusted basis over the given investment period?

(2 marks)

b) Marla is an investment analyst and CFA Charterholder. Her role involves developing trading strategies based on publicly available information related to a range of companies. For each of the past five years, her investment strategies have performed exceptionally well in that they have generated consistent, positive, abnormal risk-adjusted returns.

Given Marlas level of performance, discuss what might this indicate about the level of market efficiency and outline whether she has acted in a manner that contravenes her responsibilities as a CFA Charterholder?