part 1 Explain the concept of asset allocation and the two-fund theorem, by describing the procedure to find the optimal capital allocation line in a market with two risky assets and the risk-free asset. Make sure you pay attention to: The steps required to build the portfolios The combination with the risk-free rate What are the possibilities of leveraging-deleveraging on the capital allocation line This is a theory question, no Excel needed. Write the answer in Section 1 of the report. If you want, you can help yourself with graphs to clarify your answers.

part 2 Explain how it is possible to measure the performance of a portfolio (fund) based on the features of the portfolio itself. How many tools you know for it? Answer by addressing the following points: Explain the differences between the tools Clearly indicate which tool is better to use for measuring the performance relative to the benchmark. Clearly indicate which tool is better to use for measuring the consistency of the performance. This is a theory question, no Excel needed. Write the answer in Section 3 of the report.