Q1. Explain the principal benefit of a market-neutral long–short portfolio. What risks are inherent in such a portfolio that a long-only equity portfolio lacks? (150-200 words)
Q2. Discuss the situations that could cause an upward bias in the calculation of the Sharpe ratio? (200-300 words)
Q3. Discuss the use of repurchase agreements (repos) to finance bond purchases and the factors that affect the repo rate. (100-150 words)
