.You are an investment advisor and your client is not sure whether to invest in actively or passively managed fund. Explain the pros and cons of each approach. Relate your discussion to the efficient market hypothesis and its implications.

2.Discuss the strengths and limitations of the behavioralist approach to investment analysis, in comparison with conventional theories assuming full investor rationality.

3.Suppose you are an investment advisor. You suggest your clients to buy stocks of small firms and stocks with high ratios of book equity to market equity (B/M). (1) Explain the rationale of your suggested investment strategy (suppose the CAPM is your benchmark model). (2) Explain the multifactor APT model that incorporates size and book-to-market equity as proxies for systematic risk exposures and provide risk- and behavioral-based interpretations of these two additional risk exposures.Explain the pros and cons of each approach.