1. Explain the momentum effect. Also, explain how you set up a momentum trading strategy.
2. Set up an “equity market neutral” strategy of hedge funds. What is the expected return of the strategy? What is the error term of the strategy?
3. What is the APR of a security that pays 2% every 6 months?
A. 4%
B. 12%
C. 1%
D. 4.04%
Please explain how you got to that answer