1. 1 1 Ch2&3 – MBA 567 What is covered in the Rest? Portfolio Performance Evaluation – ch24 International Diversification – ch25 Misc – Ch26 and 27

2. 2 2 Ch2&3 – MBA 567 Portfolio Performance Evaluation Performance measures – page 854 – 855 Market timing ability

3. 3 3 Ch2&3 – MBA 567 Robert Merton’s Question Investor X put $1,000 in 30 day T-bills on 1/1/1926 and always rolled over all proceeds into 30-day Tills. His terminal wealth on 12/31/2005 was $18,350. Investor Y put $1,000 in the S&P500 portfolio on 1/1/1926 and always reinvested all dividends in that portfolio. His terminal wealth on 12/31/2005 was $2.3 million. Investor Z, a perfect timer, shifts all funds at the beginning of each year into either bills or stocks, whichever is going to do better. Beginning at the same date, how much would Investor Z have ended up with 80 years later?

4. 4 4 Ch2&3 – MBA 567 225 million

5. 5 5 Ch2&3 – MBA 567 International Diversification Risk factors in international investing Exchange rate risk Political risk

6. 6 6 Ch2&3 – MBA 567 Risk and Return Figure 25.3 – 25.5 (page 911-912)