Over the past five years, two portfolio managers, Valerie and Grace, both have $+2\%$ CAPM alphas Valerie manages a value fund, and Grace manages a growth fund. Growth stocks outperformed value stocks during these five years. Which manager would you expect to have the higher alpha relative to the Fama$-$French three$-$factor model?

Valerie

Grace

lt depends on the market betas of the managers' funds

lt depends on the stock market's excess return

lt depends on how much growth stocks beat value stocks

Which of the following statements is true for ETFs $($exchange$-$traded funds$)$ but not for mutua funds?

Investors can always redeem their fund shares at net asset value $($NAV$)$

Funds must disclose their holdings each quarter

Funds must distribute any capital gains to investors annually

Typical investor purchases do not change the number of fund shares outstanding

Which of the following strategies is most likely to help an investor minimize her tax burden?

Trading stocks frequently

Withdrawing money from a $401($k$)$ account before the age of $55$

Investing in high$-$turnover mutual funds

Investing in municipal bonds issued by her state

Investing in stocks with high dividend yields