1. Lets throw in a mutual fund example for good measure. The exam will be weighted more heavily towards bond mathematics (but there will be plenty of mutual fund questions). Say you invest $10,000 in a mutual fund with a front-end load of 4.5% and a sinking back-end load of 2% that goes away after 3 years. The fund also assesses 12b-1 fees at .50%. After 4 years, what would the future value of this investment be assuming an average annual return of 7.5%?

2. Please compare the Sharpe ratios for the following portfolios (assume a 4% risk free rate of return):

Portfolio A: Mean return of 13.62% and a Standard Deviation of 14%

Portfolio B: Mean return of 12.87% and a Standard Deviation of 13%

Portfolio C: Mean return of 12.15% and a Standard Deviation of 10%

Which portfolio offers the best performance on a risk adjusted basis?