Consider the following scenario:

Question 1 Annie compares the performances of the two funds under her management: X and Y. Such funds have been observed based on monthly data over a three-year time period. X has a mean return of 4.39% and a standard deviation of 1.52%. Y, on the other hand, has a mean return of 5.72% and a standard deviation of 3.16%. Last, the mean difference between the returns of the two funds is at 1.45% with a standard deviation of 3.88%.

What should an analyst conclude at a 5% significance level?

	a.	Reject H0
	b.	Fail to reject H0
	c.	Fail to reject HA

#2

Portfolio As returns have a mean of 6% and a standard deviation of 3%. Portfolio Bs returns have a mean of 16% and a standard deviation of 20%. Last, Portfolio Cs returns have a mean of 21% and a standard deviation of 28%. What is the optimal portfolio assuming you use Roys safety-first criteria with a threshold of 4%?

	a.	Portfolio C.
	b.	Portfolio B.
	c.	Portfolio A.

#3 A retiree is ready to claim his pension benefits and is faced with several payment alternatives. Given an annual rate of return of 15%, which among the options below yields the greatest present value (PV) and what is its difference from the alternative?

Alternative 1: Receive $2,500.00 at the end of year for 10 years.

Alternative 2: Receive $2,300.00 at the start of each year for 10 years, the first will be receivable immediately.

	a.	The retiree should choose Alternative 2 because its PV exceeds Alternative 1s by $727.72.
	b.	The retiree should choose Alternative 1 because its PV exceeds Alternative 2s by $2,000.00.
	c.	The retiree should choose Alternative 2 because its PV exceeds Alternative 1s by $1,003.75

#4 Consider the following scenario:

Annie compares the performances of the two funds under her management: X and Y. Such funds have been observed based on monthly data over a three-year time period. X has a mean return of 4.39% and a standard deviation of 1.52%. Y, on the other hand, has a mean return of 5.72% and a standard deviation of 3.16%. Last, the mean difference between the returns of the two funds is at 1.45% with a standard deviation of 3.88%.

How much is the value of the t-statistic?

	a.	2.24
	b.	2.05
	c.	2.16