PRIN.OF CORPORATE FINANCE >BI<
12th Edition
ISBN: 9781260431230
Author: BREALEY
Publisher: MCG CUSTOM
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Chapter 13, Problem 14PS
Summary Introduction
To discuss: The reason why pension fund manager should select a portfolio with a pin.
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Chapter 13 Solutions
PRIN.OF CORPORATE FINANCE >BI<
Ch. 13 - Prob. 1PSCh. 13 - Prob. 2PSCh. 13 - Market efficiency True or false? The...Ch. 13 - Prob. 4PSCh. 13 - Prob. 5PSCh. 13 - Behavioral finance True or false? a. Most managers...Ch. 13 - Prob. 7PSCh. 13 - Prob. 8PSCh. 13 - Prob. 9PSCh. 13 - Market efficiency How would you respond to the...
Ch. 13 - Market efficiency Respond to the following...Ch. 13 - Market efficiency evidence Which of the following...Ch. 13 - Prob. 13PSCh. 13 - Prob. 14PSCh. 13 - Prob. 15PSCh. 13 - Market efficiency implications What does the...Ch. 13 - Prob. 17PSCh. 13 - Prob. 18PSCh. 13 - Prob. 19PSCh. 13 - Prob. 20PSCh. 13 - Prob. 21PSCh. 13 - Prob. 22PSCh. 13 - Prob. 23PS
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- Would you expect a typical open-end fixed-income mutual fund to have higher or lower operating expenses than a fixed-income unit investment trust? Why?arrow_forwardHow might the constant scrutiny and demand for consistentresults affect the long-term performance of a mutual fund?arrow_forwardThis question assumes the standard mean-variance utility function. A pension scheme offers investors two possible funds to invest in: a cash fund and a balanced fund. The cash fund offers a guaranteed return of 2%. The balanced fund offers an expected return of 3.20% with volatility 15.70%. What is the lowest level of risk-aversion that would cause an investor to choose the cash fund?arrow_forward
- What are the two ways a sinking fund can be handled? Whichmethod will be chosen by the firm if interest rates have risen? Ifinterest rates have fallen?arrow_forwardWhy is it so hard for actively managed funds to generate higher rates of return than passively managed index funds having similar levels of risk? Is there a simple way for an actively managed fund to increase its average expected rate of return?arrow_forwardWhich of the following hedge fund types is most likely to have a return that is closest to risk-free?a. A market-neutral hedge fund.b. An event-driven hedge fund.c. A long/short hedge fund.arrow_forward
- Explain the concept of immunization within a portfolio management context. How can immunization be achieved for a fixed income strategy? What type of fund would typically employ immunization techniques? Further, can you employ immunization for asset only funds, and if so, how is this different to asset and liability types of funds? Carefully justify your answers.arrow_forwardWhat type of mutual funds would not be good for long-term investors? Can you find a specific one and explain why it would be a mistake for a long-term investor to buy it?arrow_forwardWhy is it harder to assess the performance of a hedge fund portfolio manager than that of a typical mutual fund manager?arrow_forward
- How can a mutual fund manager who follows a momentum trading strategy expect to earn above - average return 1. Provided the stock price has been decreasing below the mean reversion point and other investors follow a mean reversion strategy the fund manager is likely to earn an above average return 2. If the fund manager follows a momentum strategy and buys a stock as the price is increasing while other investors follow a mean reversion strategy, then it is likely the stock price will continue to rise 3. Provided the stock price have been rising above the mean reversion point and other investors follow a mean reversion strategy, the fund manager is likely to earn an above average return 4. If the fund manager follows a momentum strategy and buys a stock as the price is increasing and other investors also follow a momentum strategy, then it is likely the stock price will continue to risearrow_forwardA hedge fund charges the common 2 plus 20% fee structure, i.e. 2% management fee and 20% of any net (after management fees) profits. A pension fund invests in the hedge fund. In addition to the usual market risk from investing, what type of risk is faced by the pension fund manager investing in the hedge fund? Explain with respect to the hedge fund manager’s incentives.arrow_forwardWhich of the following is an example of direct finance? Select one:investors buy shares in a mutual fundA pension fund manager buys a security in the secondary marketinvestors buy shares in a mutual fundNone of the answers are correctcompany buy security in a secondary marketarrow_forward
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