Question 1:

Suppose the TRUE model of expected returns is the Fama French 3 factor model. For a particular security, you calculate a non-zero alpha using the CAPM index model. Which of the following must be true?

		You have discovered an arbitrage opportunity
		You have encountered an omitted factor problem
		The market is inefficient
		A, B and C are all true
		A, B and C are not true

Question 2:

Suppose two portfolios have the same average return and the same standard deviation of returns, but portfolio A has a higher beta than portfolio B. According to the Sharpe measure, the performance of portfolio A

		is better than the performance of portfolio B.
		is the same as the performance of portfolio B.
		is poorer than the performance of portfolio B.
		cannot be measured as there are no data on the alpha of the portfolio.
		None of the options are correct.

Question 3:

The AJL Fund has a front-end load of 3%, a back-end load of 5% and an expense ratio of 2%. NAV of the fund at the beginning of the year (t=0) is $20. During the year, the fund paid out dividend distributions of $1.00 to investors. Assume the stocks in the AJL Fund went up by 15% during the year. What is the NAV at year end (at t=1)?

		$20.77
		$21.77
		$22.54
		$23.54
		None of the above

Question 4:

The Helix TMT Fund sells Class A shares with an expense ratio of 3.0% annually, charged on end of year asset values and Class B shares with a front-end load of 12% and no expense ratio. If you plan to sell the fund after 10 years, are Class A or B shares the better choice? Assume assets of the fund grows 10% annually, and no distributions are paid to investors.

		Class A
		Class B
		There is no difference
		There is insufficient information given

Question 5:

The SHGA Fund has a front-end load of 2%, a back-end load of 5%, and an expense ratio of 0%. NAV of the fund at the beginning of the year (t=0) is $100. During the year, the fund paid out dividend distributions of $2.00 to investors. At the end of the year, the NAV is $120. If an investor sells her fund shares at the end of the year, what is her investment return?

		6.84%
		7.50%
		13.68%
		15.00%
		None of the above