Mr. Ahmed aged 62 is the father of Mr. Moosa aged 28. Ahmed is the retired employee of Bank Nizwa and Moosa is working with Oman Tel from past 5 years. Mr. Ahmed has a saving of OMR 120,000 and Moosa has a saving of OMR 10,000. You are required to provide investment advice to Ahmed and Moosa on making a good investment portfolio with the available funds they have. Calculate the value of the funds after one year. Assume that the returns are achieved by all the securities in which investments are made. Show your calculations. Also find the standard deviation and covariance of their portfolio. Sr. No Instrument Returns Probability 2

Mr. Ahmed aged 62 is the father of Mr. Moosa aged 28. Ahmed is the retired employee of Bank Nizwa and Moosa is working with Oman Tel from past 5 years. Mr. Ahmed has a saving of OMR 120,000 and Moosa has a saving of OMR 10,000. You are required to provide investment advice to Ahmed and Moosa on making a good investment portfolio with the available funds they have. Calculate the value of the funds after one year. Assume that the returns are achieved by all the securities in which investments are made. Show your calculations. Also find the standard deviation and covariance of their portfolio. Sr. No Instrument Returns Probability 2

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter15: Mutual And Exchange Traded Funds

Section: Chapter Questions

Problem 1FPC

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Mr. Ahmed aged 62 is the father of Mr. Moosa aged 28. Ahmed is the retired employee of Bank Nizwa and Moosa is working with Oman Tel from past 5 years. Mr. Ahmed has a saving of OMR 120,000 and Moosa has a saving of OMR 10,000. • You are required to provide investment advice to Ahmed and Moosa on making a good investment portfolio with the available funds they have. • Calculate the value of the funds after one year. Assume that the returns are achieved by all the securities in which investments are made. Show your calculations. • Also find the standard deviation and covariance of their portfolio.
Mr John who is 30-year old which is one of your client. He recently received £30,000 from his family and wants to invest this fund for at least 25 years. He has a job with saving of £800 per month. He comes to you as his financial advisor seeking for investment advice. Suggest a list of potential investments opportunities for Mr. John. Keeping in view of his age and financial condition, what is your financial advice? Hint: consider different investment options in money and capital market.
At the start of the year, Piotr has an investment fund worth $30,000.00. 4 months later the fund is worth $30,750.00 and Piotr deposits another $3,000.00. 4 months after that, the fund is worth $34,425.00 and Piotr withdraws the $3,000.00 his deposited the time before. At the end of the year the fund is worth $31,425.00. a) What is the Dollar Weighted Return for Piotr's investment? b) What is the Time Weighted Return for the investment fund? c) What would the fund balance at the end of year have to be to make the Time Weighted Return for the year equal the Dollar Weighted Return for the year? d) In this case (TWR = DWR) what was the return on the investment fund in the last time period?
A pensioner is expecting a lump sum of GHC 200,000 when she goes on pension next year and is thinking of the best way to allocate the funds to be received. An investment analyst has introduced her to a four funds as follows: Gamma Fund: This specializes in money market instruments and bonds of large corporations Delta Fund: This specializes in equities of exchange listed financial institutions Beta Fund: This specializes in bonds and equities of all good performing companies Index Fund: This is a portfolio that mimics the Ghana Stock Exchange All Share Index The investment analyst gathered information about the performance of the four funds and this is presented below: Funds Mean Return Standard Deviation Beta Co-efficient Gamma 15% 8% 0.25 Delta 20% 14% 1.20 Beta 18% 14% 0.85 Index 17% 12% 1.00 The rate on Government of Ghana five-year bond which is used as the standard risk-free rate is 8% per annum. The…
Your younger brother is very concerned about investment performance, but he is willing to tolerate some risk. He decides to invest $100,000 in a mutual fund that will earn 10% per year. The proceeds will be accumulated as a lump sum and paid out at the end of year 10. Based on the data given below under Note. what is today’s purchasing power equivalent of your younger brother’s investment? Note: Your older brother is concerned more about investment safety than about investment performance. For example, he has invested $100,000 in safe 10-year corporate AAA bonds yielding an average of 6% per year, payable each year. His effective income tax rate is 33%, and inflation will average 3% per year.
Mr. Akbar and Ms. Arwa are both 45 years old. They have two main financial goals: saving for retirement and their children's college education , Mr. Akbar has OMR 35,000 and Ms. Arwa has OMR 40,000 . They come to you for investment advice on the basis of the following investment alternatives : - Sl No 1 2 3 4 5 Securities Equity Preference shares Government Bonds Bank deposits Debenture Mutual Fund Securities return 12.5 % 10 % 6% 4.5\% 8% 9% 6 Your analysis and investment strategy proposal should : 1. Explain in general how equity , preference shares , government bonds, debentures , mutual fund and other investment instruments are traded in financial markets . 2. Analyze investment opportunities that align with the financial goals of the Mr. Akbar and Ms. Arwa . 3. Recommend specific investments to create a portfolio from the above list of investment alternatives (at least 4 investment alternatives ). 4. Calculate Expected Return , Variance , Standard Deviation , Covariance and…
Jean invests $1000 in Year 1 in a socially responsible fund, and doubles the amount each year after that (so the investment is $1000, 2000, …). (a) If she does this for 10 years, and the investment pays 4% annual interest, what is the future worth of her investment? (b) What are socially/ethically responsible investment funds? How do they differ from other types of investments? Why do people invest in them?
Alexa plans to invest $50,000 in a mutual fund that requires either a 4% front-end load or a 4% back-end load. She expects the fund to return 8% per year and she plans to hold the investment for 3 years. Calculate the size of the front-end and back-end load and show evidence that Alexa is indifferent between the front-end versus back-end load alternatives.
Assume that your uncle gave you $50,000 to invest solely in mutual funds. Based on your point in the life cycle and your investment philosophy, identify your investment goals and explain how you would spread your money among different funds. Include the funds you would invest in, the amounts you would invest and explain why you selected these funds.
Mr. Jonas invested a total of &100,000 in three mutual funds: a growth fund that lost 8%, a balanced fund that gained 3%, and a bond fund that gained 2%. As a result, he lost $1600 on his investment. If he invested $20,000 more in the growth fund in the bond fund, how much did he invest in each fund?
As the Fund Manager for Bank of Trinidad and Tobago Limited, you are to advise the following two (2) clients based on their respective financial situations. a) Your best friend has asked to assist him in making the best investment out of the following options. Which would you advise him to choose and why? Option 1: $12,000 in 5 years’ time at 6 percent interest.Option 2: $15,000 in 2 years’ time at 9 percent interest.Option 3: $15,000 today. No strings attached.Option4: $5,000 each year for 2 years at 7 percent interest compounded semi-annually.b) Betty Kay has a contract in which she will receive the following payment for the next 5 year: $1,000, $2,000, $3,000, $4,000 and $5,000. She will then receive an annuity of $8,500 a year for the end of the 6th through the end of the 15th year. She is offered a $30,000 to cancel the contract. If the payments are discounted at 14 percent should she cancel thecontract?
Bart is a college student who has never invested his funds. He has saved $1,250 and has decided to invest the funds in a money market fund with an expected annual return of 4.19%. Bart will need the money in one year. The MMF imposes fees that will cost Bart $24 at the time he withdraws the funds in one year. How much money will Bart have in one year as a result of this investment? (Round to the nearest cent)