Investing: Inverse ETFS (Exchange Traded Funds) Inverse ETFS, sometimes referred to as "bear market" or "short" funds, are designed to deliver the opposite of the performance of the index or catego they track, and so can be used by traders to bet against the stock market. The following table shows the performance of three such funds as of August 5, 2015.t Year-to-Date Loss (%) MYY (ProShares Short Midcap 400) 6 SH (ProShares Short S&P 500) 5 REW (ProShares UltraShort Technology) You invested a total of $12,000 in the three funds at the beginning of 2011, including an equal amount in SH and REW. Your year-to-date loss from the first two funds amounted to $510. How much did you invest in each of the three funds? MYY SH REW

Investing: Inverse ETFS (Exchange Traded Funds) Inverse ETFS, sometimes referred to as "bear market" or "short" funds, are designed to deliver the opposite of the performance of the index or catego they track, and so can be used by traders to bet against the stock market. The following table shows the performance of three such funds as of August 5, 2015.t Year-to-Date Loss (%) MYY (ProShares Short Midcap 400) 6 SH (ProShares Short S&P 500) 5 REW (ProShares UltraShort Technology) You invested a total of $12,000 in the three funds at the beginning of 2011, including an equal amount in SH and REW. Your year-to-date loss from the first two funds amounted to $510. How much did you invest in each of the three funds? MYY SH REW

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 1P

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Investing: Inverse Mutual Funds Inverse mutual funds, sometimes referred to as "bear market" or "short" funds, seek to deliver the opposite of the performance of the index or category they track, and can thus be used by traders to bet against the stock market. This question is based on the following table, which shows the performance of three such funds as of February 27, 2015.† Year-to-date Loss SHPIX (Short Smallcap Profund) 4% RYURX (Rydex Inverse S&P 500) 3% RYCWX (Rydex Inverse Dow) 6% You invested a total of $12,000 in the three funds at the beginning of 2015, including an equal amount in RYURX and RYCWX. Your year-to-date loss from the first two funds amounted to $330. How much did you invest in each of the three funds?
Investing: Inverse Mutual Funds Inverse mutual funds, sometimes referred to as “bear market” or “short” funds, seek to deliver the opposite of the performance of the index or category they track and can thus be used by traders to bet against the stock market. Exercises 17and18 are based on the following table, which shows the performance of three such funds as of February 27, 2015: 17 Year -To-Date loss(%) DSHPIX (Short smallcap profund) 4 RYURX ( Rydex inverse S&P 500 ) 3 RYCWX (Rydex Inverse Dow ) 6 You invested a total of $6,000 in the three funds at the beginning of 2015, including equal amounts in SHPIX and RYURX. Your total year-to-date loss amounted to $260. How much did you invest in each of the three funds?
You are tasked with comparing two Icelandic equity funds. The other fund is called the RU IS Equity Fund (RIS). The other fund is called HÍ IS Equity Fund (HIS). It is known that the funds had the following ratios in certain shares over the period 2018 to 2021 (it is not assumed that they received dividends during the period). The proportions did not change over the period. The price of individual shares over the period can be found in the red box down below the text. a) What was the average annual return of RIS and HIS over the period
(Using the CAPM to find expected returns) Sante Capital operates two mutual funds headquartered in Houston, Texas. The firm is evaluating the stock of four different firms for possible inclusion in its fund holdings. As part of their analysis, Sante's managers have asked their junior analyst to estimate the investor-required rate of return on each firm's shares using the CAPM and the following estimates: The rate of interest on short-term U.S. Treasury securities is currently 4 percent, and the expected return for the market portfolio is 10 percent. What should be the expected rates of return for each investment? Security Beta A 1.67 B 0.58 C 1.14 D 0.78 (Click on the icon in order to copy its contents into a spreadsheet.) Question content area bottom Part 1 a. The expected rate of return for security A, which has a beta of 1.67, is enter your response here%. (Round to two decimal places.) Part 2 b. The expected…
You are given the following information concerning several mutual funds: Fund Return in Excess of the Treasury Bill Rate Beta A 12.4% 1.14 B 13.2% 1.22 C 11.4% 0.90 D 9.8% 0.76 E 12.6% 0.95 During the time period, the Standard & Poor's stock index exceeded the Treasury bill rate by 10.5 percent (i.e., r(m) - r(f) = 10.5%) a. Rank the performance of each fund without adjusting for risk and adjusting for risk using the Treynor index. Which, if any, outperformed the market? (Remember, the beta of the market is 1.0.) b. The analysis in part (a) assumes each fund is sufficiently diversified so that the appropriate measure of risk is the beta coefficient. Suppose,…
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Use the information for the question(s) below. An exchange-traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of three shares of International Business Machines (IBM), five shares of Apple (AAPL), and eight shares of Tesla (TSLA). Suppose the current market price of each individual stock is shown below: Stock Current Price IBM $145.60 Apple $180.00 Tesla $267.50 What is the price per share of the ETF in a normal market? Assume that the ETF is trading for $3,700.00. What (if any) arbitrage opportunity exists? What (if any) trades would you make?
If all of the following mutual funds are designed to passively mimic the S&P 500 stock index, which mutual fund would be the best choice? Mutual fund C with an expense ratio .07% Mutual fund D with an expense ratio of .12% Mutual fund A with expense ratio .28% Mutual fund B with an expense ratio of .59%
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2015 −18.20 % −35.50 % 2 % 2016 25.10 20.60 5 2017 13.50 12.70 2 2018 6.80 8.40 6 2019 −1.86 −4.20 3 Calculate Jensen’s alpha for the fund, as well as its information ratio. (Do not round intermediate calculations. Enter the alpha as a percent rounded to 2 decimal places. Round the ratio to 4 decimal places.)
Consider an index fund that contains the following four stocks: American Campus Communities, Inc. (ACC), Global Net Lease, Inc. (GNL), Jones Lang LaSalle Incorporated (JLL), and Merck & Co., Inc. (MRK). On March 30, 2022, the stock prices at close were: ACC $56.73 GNL $15.65 JLL $243.22 MRK $82.40 The mutual fund held the following numbers of shares in these companies: Shares (million) ACC 2.087 GNL 1.558 JLL 0.748 MRK 37.950 On March 30, the mutual fund had 25 million shares outstanding. Calculate the net asset value per mutual fund share (in dollars). During the day on March 30, the fund had a net cash inflow of $250 million. How many shares of MRK did the index fund manager have to purchase in order to maintain a portfolio with the same portfolio weights as at the start of the day? You should assume that the fund manager invests all net inflows in securities at market close prices on March 30. She holds no cash balance.
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You have been given the following return information for two mutual funds (Papa and Mama), the market index, and the risk-free rate. Year Papa Fund Mama Fund Market Risk-Free 2011 –12.6 % –22.6 % –24.5 % 1 % 2012 25.4 18.5 19.5 3 2013 8.5 9.2 9.4 2 2014 15.5 8.5 7.6 4 2015 2.6 –1.2 –2.2 2 Calculate the Sharpe ratio, Treynor ratio, Jensen’s alpha, information ratio, and R-squared for both funds. (Input all amounts as positive values. Do not round intermediate calculations. Enter all answers as a decimal value rounded to 4 decimal places.) PAPA MAMA SHARPE RATIO: TREYNOR RATIO JENSEN'S ALPHA INFORMATION RATIO R-SQUARED