Problem 7-4A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government andcorporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky fundsis as follows:ExpectedStandardReturnDeviationStock fund (S)Bond fund (B)17%30%1122The correlation between the fund returns is 0.10.a-1. What are the investment proportions in the minimum-variance portfolio of the two risky funds. (Do not round intermediatecalculations. Enter your answers as decimals rounded to 4 places.)Portfolio invested in the stock69.2241Portfolio invested in the bond0.7649

Given, Risk-free rate = 8% Stock expected return = 17% Stock standard deviation = 30% Bonds expected…

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky funds is as follows: Expected Standard Return Deviation Stock fund (S) Bond fund (B) 178 30% 11 22 The correlation between the fund returns is 0.10. a-1. What are the investment proportions in the minimum-variance portfolio of the two risky funds. (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.) Portfolio invested in the stock 69.2241 Portfolio invested in the bond 0.7649

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky funds is as follows: Expected Standard Return Deviation Stock fund (S) Bond fund (B) 178 30% 11 22 The correlation between the fund returns is 0.10. a-1. What are the investment proportions in the minimum-variance portfolio of the two risky funds. (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.) Portfolio invested in the stock 69.2241 Portfolio invested in the bond 0.7649

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 8FPE

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Required information Section Break (8-11) Skip to question [The following information applies to the questions displayed below.] A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Expected Return Standard Deviation Stock fund (S) 16% 32% Bond fund (B) 10% 23% The correlation between the fund returns is 0.20. Problem 6-8 (Algo) Required: What is the expected return and standard deviation for the minimum-variance portfolio of the two risky funds? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
INV 1 6f You have decided to invest in three mutual funds: one in equities, one in long corporate and government bonds, and a money market fund invested in T-bills yielding 5%. Your estimate of the relevant parameters for the equities and bond funds are as follows: Expected Return Standard Deviation Equities .15 .30 Bonds .06 .09 The correlation between the fund returns is 0.12. Compare the portfolios in #4 and #5. Is this consistent with what you would expect when adding the T-bill money market fund as essentially the risk-free asset?
INV 1 6c You have decided to invest in three mutual funds: one in equities, one in long corporate and government bonds, and a money market fund invested in T-bills yielding 5%. Your estimate of the relevant parameters for the equities and bond funds are as follows: Expected Return Standard Deviation Equities .15 .30 Bonds .06 .09 The correlation between the fund returns is 0.12. Determine the best feasible CAL and calculate its reward-to-volatility ratio.
INV 1 6e You have decided to invest in three mutual funds: one in equities, one in long corporate and government bonds, and a money market fund invested in T-bills yielding 5%. Your estimate of the relevant parameters for the equities and bond funds are as follows: Expected Return Standard Deviation Equities .15 .30 Bonds .06 .09 The correlation between the fund returns is 0.12. Finally, adding the money market fund to your risky portfolio, determine the weights of a portfolio yielding 10% overall, and calculate its standard deviation.
8-7 PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4 million investment fund. The fund consists of four stocks with the following investments and betas:Stock Investment BetaA $ 400,000 1.50B 600,000 (0.50)C 1,000,000 1.25D 2,000,000 0.75If the market’s required rate of return is 14% and the risk-free rate is 6%, what is the fund’s required rate of return? 8-8 BETA COEFFICIENT Given the following information, determine the beta coefficient for Stock J that is consistent with equilibrium: ^rJ ¼ 12.5%; rRF ¼ 4.5%; rM ¼ 10.5%.8-9 REQUIRED RATE OF RETURN Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13%, and the risk-free rate of return is 7%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? 8-10 CAPM AND REQUIRED RETURN Bradford Manufacturing Company has a beta of 1.45, while Farley Industries has a beta of 0.85. The required return on an index fund…
INV 1 6d You have decided to invest in three mutual funds: one in equities, one in long corporate and government bonds, and a money market fund invested in T-bills yielding 5%. Your estimate of the relevant parameters for the equities and bond funds are as follows: Expected Return Standard Deviation Equities .15 .30 Bonds .06 .09 The correlation between the fund returns is 0.12. Without the money market fund, what would be the weights of a portfolio on the best feasible CAL, composed of the equities and bond funds which would be expected to return 10%, and what would be its standard deviation?
8.7 Suppose you are the money manager of a $5.09 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 480,000 1.50 B 760,000 (0.50) C 1,300,000 1.25 D 2,550,000 0.75 If the market's required rate of return is 10% and the risk-free rate is 6%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. %
Problem 1. A client invested $100 in a mutual fund at the start of the month. After 20 days, the portfolio gained 10% (i.e., value = $110), and the client added an extra $50 (total portfolio value=$160). From day 20 to day 30, the portfolio lost 9.09%--the final portfolio value is $160×(1-0.0909)=$145.46. Calculate the money-weighted return and time-weighted return. Which rate of should you use to evaluate the performance of the mutual fund manager?
Question 11: You regress the monthly returns of XYZ fund for the past five years against three factors (i.e. Market factor = 1.2, SMB factor = −0.3, HML factor = 1.4)). What do these coefficient values mean and what type of stocks does the fund probably hold?
Chapter 13Financial Planning Exercise 7Calculating approximate yield on mutual fund About a year ago, Elliot Cox bought some shares in the Axis Fund. He bought the fund at $24.50 a share, and it now trades at $26.00. Last year, the fund paid dividends of 40 cents a share and had capital gains distributions of $1.83 a share. Using the approximate yield formula, what rate of return did Elliot earn on his investment? Round the answer to two decimal places.% Repeat the calculation using a financial calculator. Round the answer to two decimal places.% Would he have made a 20% rate of return if the stock had risen to $30 a share?-Select-YesNo
7. Impacts of Costs on Returns. A mutual fund has a 1.69% expense ratio and begins with a $124.655 NAV. It experiences the annual returns shown below. What are the end-of-year NAVs after fees for each year? What are the after-fee returns each year?
ASAP 65.You invest in a mutual fund that charges a 3% front-end load, 1% total annual fees and a 2% back-end load, which decreases .5% per year. How much will you pay in fees on a $10,000 investment that does not grow if you cash out after 3 years of no gain? $635 $219 $553 $103 66.The five-star Morningstar rating implies superior returns compared to risk. lowest turnover compared to peers. superior risk compared to return. lowest fees compared to peers.