QUESTION 23

1. Troy is investing $48,000 in Fund A and $32,000 in Fund B. Fund A and Fund B have betas of 1.4 and 1.1, respectively. Fund A has an R2 of .93, while Fund B has an R2 of .87. If the expected market return is 12% and the risk-free rate of return is 3%, what is the expected return for the portfolio using the CAPM.

   		a. 15.36%.
   		b. 14.52%.
   		c. 14.25%.
   		d. 12.00%.

QUESTION 24

1. Monica rebalances her portfolio frequently to take advantage of perceived opportunities in certain market sectors. What type of asset allocation is Monica engaging in?

   		a. Optimal.
   		b. Tactical.
   		c. Strategic.
   		d. Hybrid.