Least risky asset to invest for a child. Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

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Answer 1

Question

Chapter 28, Problem 2PS

A

Summary Introduction

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

B

Summary Introduction

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

C

Summary Introduction

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

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You manage a pension fund that will provide retired workers with lifetime annuities. You determine that the payouts of the fund are (approximately) level perpetuities of $1 million per year. The interest rate is 10%. You plan to fully fund the obligation using 5-year maturity and 20-year maturity zero-coupon bonds. How much market value of each of the zeros will be necessary to fund the plan if you desire an immunized position? 4 million for 5 year bond and 6 million of 20-year bond. 6 million for 5 year bond and 4 million of 20-year bond. O 6.67 million for 5 year bond and 3.33 million of 20-year bond. O 3.33 million for 5 year bond and 6.67 million of 20-year bond. Question 9 Using the same information from question 8, suppose that one year has passed, and the interest rate remains at 10%. What actions are required to rebalance the portfolio? O buy additional 0.67 million 5-year bond and sell 0.67 million 20-year bond. Sell 0.67 million 5-year bond, purchase additional 0.67 million…

You manage a pension fund that will provide retired workers with lifetime annuities. You determine that the payouts of the funds are going to closely resemble perpetuities of $1 million per year. The interest rate is 9% per year. You plan to fully fund the obligation using 5-year and 20-year maturity zero-coupon bonds. How much market value of each of the zero coupon bonds will be necessary to fund the plan if you desire an immunized position? Duration of a perpetuity is (1+y)/y

An investor purchases a mutual fund for $50. The fund pays dividends of $1.50, distributes a capital gain $2, and charges a fee of $2 when the fund is sold on year for $52.50. What is the net rate of return from this insurance?

Answer 2

Question

Chapter 28, Problem 2PS

A

Summary Introduction

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

B

Summary Introduction

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

C

Summary Introduction

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

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Answer 3

Question

Chapter 28, Problem 2PS

A

Summary Introduction

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

B

Summary Introduction

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

C

Summary Introduction

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

Expert Solution & Answer

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Answer 4

Question

Chapter 28, Problem 2PS

A

Summary Introduction

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

B

Summary Introduction

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

C

Summary Introduction

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

Expert Solution & Answer

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Answer 5

Chapter 28, Problem 2PS

A

Summary Introduction

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

B

Summary Introduction

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

C

Summary Introduction

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

Answer 6

Chapter 28, Problem 2PS

A

Summary Introduction

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

Answer 7

Chapter 28, Problem 2PS

A

Summary Introduction

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

Answer 8

B

Summary Introduction

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

Answer 9

B

Summary Introduction

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

Answer 10

C

Summary Introduction

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

Answer 11

C

Summary Introduction

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 28 - Prob. 1PS Ch. 28 - Prob. 2PS Ch. 28 - Prob. 3PS Ch. 28 - Prob. 4PS Ch. 28 - Prob. 1CP Ch. 28 - Prob. 2CP Ch. 28 - Prob. 3CP Ch. 28 - Prob. 4CP Ch. 28 - Prob. 5CP Ch. 28 - Prob. 6CP

Least risky asset to invest for a child. Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

Solution Summary: The author explains the least risky asset of a pension fund for 10 years.

Concept explainers

Videos

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

Want to see the full answer?

Chapter 28 Solutions

Least risky asset to invest for a child. Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

Solution Summary: The author explains the least risky asset of a pension fund for 10 years.

Concept explainers

Videos

To explain: Least risky asset to invest for a child. Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

To explain: Least risk asset of the pension fund for 10 years. Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

To explain: Investment in a pension fund with the protection of inflation. Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.

Want to see the full answer?

Chapter 28 Solutions

To explain: Least risky asset to invest for a child.

Introduction: Long term investment in this case gives large amount of return after the completion of maturity period.

To explain: Least risk asset of the pension fund for 10 years.

Introduction: Bond portfolio is used to invest for a long term. This provides a higher return after the maturity period and value is not affected by the interest rate.

To explain: Investment in a pension fund with the protection of inflation.

Introduction: Treasury inflation is used to invest for the 10 years investment for a pension holder person. This gives a high return after maturity period.