u have 100 million dollars in your investment account and choose to keep your money allocated in the following proportion and rebalance each quarter. i. 60% in stocks via ETF SPY ii. 35% in bonds via ETF TLT iii. 5% in cash Over the month of september , SPYwent from $452 to $429, and TLT went from $149 per share to $144 per share. Cash has an interest rate of 0.1% annually. a) What is your overall account $ balance before rebalancing? What proportions of that is in SPY, TLT, and cash respectively? b) How do you rebalance your account to keep the allocation at 60-35-5 for SPY TLT and cash respectively? What to buy and what to selll in dolla
u have 100 million dollars in your investment account and choose to keep your money allocated in the following proportion and rebalance each quarter. i. 60% in stocks via ETF SPY ii. 35% in bonds via ETF TLT iii. 5% in cash Over the month of september , SPYwent from $452 to $429, and TLT went from $149 per share to $144 per share. Cash has an interest rate of 0.1% annually. a) What is your overall account $ balance before rebalancing? What proportions of that is in SPY, TLT, and cash respectively? b) How do you rebalance your account to keep the allocation at 60-35-5 for SPY TLT and cash respectively? What to buy and what to selll in dolla
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 5P
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You have 100 million dollars in your investment account and choose to keep your money allocated in the following proportion and rebalance each quarter.
i. 60% in stocks via ETF SPY
ii. 35% in bonds via ETF TLT
iii. 5% in cash
Over the month of september , SPYwent from $452 to $429, and TLT went from $149 per share to $144 per share. Cash has an interest rate of 0.1% annually.
a) What is your overall account $ balance before rebalancing? What proportions of that is in SPY, TLT, and cash respectively?
b) How do you rebalance your account to keep the allocation at 60-35-5 for SPY TLT and cash respectively? What to buy and what to selll in dollar amount?
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