From the data provided in the spreadsheet compute the following; 1. Sharpe and Treynor ratios and “Alpha”. (Alpha is the difference between the observed average return and the return predicted by the CAPM.) 2. Discuss the sectors that outperform the S&P500 according to the metrics you computed. 3. If any of the sectors has an alpha that is not equal to zero there is an arbitrage opportunity. Show the return on the arbitrage portfolio for any sector and how you could capture the mispricing. 4. Examine the correlation matrix. Choose the best two sector ETFs to make into a portfolio. Using different weights (as done in class), compute the expected return and standard deviation for all of these weights. Graph these and show any areas with inefficient portfolios. 5. Using the historical price data for XLB, compute the option price if the time to expiration is 57 days. 6. What assumptions have you made in these analyses?