EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 35, Problem 12DQ
To determine
Difficulty in actively managed funds to generate high rate of return .
Expert Solution & Answer
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Students have asked these similar questions
5. Suppose Alex and Spenser each invest $5,000 in the same stock. Alex invests directly and earns 5% a year. Spenser uses a retirement fund, which charges an administrative fee equal to 0.25% on managed assets, and earns 4.75%.a) At the end of one year, how much will Alex and Spenser have?b) If Alex and Spenser leave their investments in place for 30 years, with annual compounding ofthe interest, how much more will Alex have than Spenser at the end of the 30-year period?
You have decided to invest in an open-end mutual fund. You are currently looking at a fund-Washington Premier Fund-in your newspaper. The fund
is quoted as:
Name
NAV Net Chg YTD %RET
36.25
0.15
6.95
Assume that today's opening price of Washington Premier Fund equals yesterday's closing price. If you wanted to make your investment first thing this
morning, then you should expect to pay
for each share of since it
Yesterday, each share of sold for
$35.95
$43.50
$36.25
$34.44
$0.15 less
$0.15 more
$6.95 less
$6.95 more
If you had $8,000 available to invest, you could purchase
than it did the day before, and offers a return of
294
368
assesses a 0.15% fee
276
shares of.
is a no-load fund
charges a 6.95% fee
221
Your evaluation of the Washington Premier Fund is made easier by the fact that:
your investment choices are limited.
mutual funds are careful to explicitly state their investment objectives.
a mutual fund broker will select a customized mix for you.
0.15%
36.25%
6.95%
for the year.
Racine Tire Co. manufactures tires for all-terrain bicycles, The tires sell for P60 and variable cost per tire is P45; monthly fixed cost is P450,000.
Requirement:
1. Calculate the firm's break-even point in sales pesos
2. What will be the new net income?
3. If the company can increase sales volume by 15 percent above the current level, 8,400,000 tires monthly What will be the increase in net income?
Chapter 35 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 35 - Prob. 1DQCh. 35 - Prob. 2DQCh. 35 - Prob. 3DQCh. 35 - Prob. 4DQCh. 35 - Prob. 5DQCh. 35 - Prob. 6DQCh. 35 - Prob. 7DQCh. 35 - Prob. 8DQCh. 35 - Prob. 9DQCh. 35 - Prob. 10DQ
Ch. 35 - Prob. 11DQCh. 35 - Prob. 12DQCh. 35 - Prob. 1RQCh. 35 - Prob. 2RQCh. 35 - Prob. 3RQCh. 35 - Prob. 4RQCh. 35 - Prob. 5RQCh. 35 - Prob. 6RQCh. 35 - Prob. 7RQCh. 35 - Prob. 8RQCh. 35 - Prob. 9RQCh. 35 - Prob. 10RQCh. 35 - Prob. 1PCh. 35 - Prob. 2PCh. 35 - Prob. 3PCh. 35 - Prob. 4PCh. 35 - Prob. 5PCh. 35 - Prob. 6P
Knowledge Booster
Similar questions
- A corporate bond maturing in 15 years with a coupon rate of 10.9 percent was purchased for $970 and it now selling for $1,000. 1. What will be its selling price in two years if comparable market interest rates drop 4.9 percentage points? (Hint: Use Appendix A-2 and Appendix A-4 or the Garman/Forgue companion website.) Round Present Value of a Single Amount and Present Value of Series of Equal Amounts in intermediate calculations to four decimal places. Round your answer to the nearest cent. $ 2. Calculate the bond's YTM using Equation 14.5 or the Garman/Forgue companion website. Round your answer to two decimal places. %arrow_forwardA portfolio has three stocks - - 240 shares of Yahoo (YHOO), 110 Shares of General Motors (GM), and 30 shares of Standard and Poor's Index Fund (SPY). If the price of YHOO is $30, the price of GM is $30, and the price of SPY is $130, calculate the portfolio weight of YHOO and GM. O 50.0%, 22.9% O 27.5%, 42.4% 47.5%, 24.1% O 15.0%, 13.8%arrow_forwardSuppose an FI has a long position in zero-coupon bonds of seven years to maturity with a face value of $1,631,483. Today's yield on these bonds is 7.243 percent per year. These bonds are held as part of the trading portfolio. Suppose we define bad yield changes such that there is 1 chance in 20 (or a 5 percent chance) that the next day's yield increase (or shock) will exceed this given adverse move. Assuming normality and suppose that during the last year the mean change in daily yields on seven-year zero-coupon bonds was 0 percent while the standard deviation was 10 basis points. a) Estimate the dollar market value of position b) Potential adverse daily yield move c) Estimate price volatility d) Estimate daily earnings at risk e) Estimate value at risk over a period of 10 daysarrow_forward
- Many retirement funds charge an administrative fee equal to 0.25% on managed assets. Suppose that Alex and Spenser each invest $50,000 in the same year. Alex invests in a no-load fund (that doesn’t charge the 0.25% fee) and earns 5% a year. Spenser uses another retirement fund that charges the 0.25% fee and so only earns 4.75%. After 30 years, how much more will Alex have than Spenser?arrow_forwardCeteris paribus, the primary advantage of investing in mutual funds over individual stocks or bonds is that mutual funds: Select one: O a. always earn a higher rate of return than an investor could obtain with a single stock or bond. Ob. allow investors with relatively small amounts of money to diversify their investment portfolios. C. offer investors less inflation risk, and thus a higher return, than an investor could obtain with a single stock. O d. offer investors less market risk, and thus a higher return, than an investor could obtain with a single stock.arrow_forwardIf a bank offers an investment opportunity for which the interest is compounded quarterly, and you will earn an annual effective interest rate of 19.25%. Determine the nominal interest rate. Note: when calculating interest rates, do not convert to a percent. Leave it in decimal format and round to 4 places after the decimal. So if you think the answer is 3.45678%, then leave it as a proportion as 0.0345678 and then round to 0.0346.arrow_forward
- The estimated current purchasing price of a discount bond with a face value of $2000 and a yield to maturity of 10% is $ your response to the nearest two decimal place) (Round What is the approximate yield to maturity on a discount bond that matures one year from today with a maturity value of $10,600, and the price today is $9283.67? OA. 83% O B. 14.2% O C. 7% O D. 8.3% OE. 9%arrow_forwardQuestion 6 of 6 Desert Company invests its annual savings in different mutual funds. In 2014, they invested $13,500 in high-growth funds, $3,500 in medium-growth funds, and $6,000 in low-growth funds. If the value of their low growth funds dropped by 8.60% this year, while the rest stayed the same, by what percent did the total value of the investments change? 0.00 % Round to two decimal placesarrow_forward1.Which of these is an example of an index (and would have a corresponding Index Fund)? Question options: Apple stock US Treasury bonds A target retirement fund The S&P 500 2. Suppose you put $1,000 in an account that earns 5% interest per year, every year. You never invest additional money and you never withdraw money or interest payments. So in the first you, you earn $50 in interest. In Year 4, how much will this account earn? Question options: Less than $50 More than $50 $50 This is too hard.arrow_forward
- 2. Pretend that today is your birthday and you decide to start saving for your retirement. You will retire on your 65th birthday and need $4,000 per month for the next 20 years, increasing $100 per month after the first month. You will make your first withdrawal on your 65th birthday, the day you retire. You will make the first deposit today in an account paying 7% interest compounded daily, and continue to make the same $123.07 equal weekly deposits up to your 60th birthday, then you stop making deposits. What birthday are you celebrating today? Create a cash flow diagram.arrow_forward8. Risk and return Suppose Valerie is choosing how to allocate her portfolio between two asset classes: risk-free government bonds and a risky group of diversified stocks. The following table shows the risk and return associated with different combinations of stocks and bonds. Fraction of Portfolio in Diversified Average Annual Standard Deviation of Portfolio Return Stocks Return (Risk) Combination (Percent) (Percent) (Percent) 1.00 B 25 2.00 5. 50 3.00 10 75 4.00 15 100 5.00 20 If Valerie reduces her portfolio's exposure to risk by opting for a smaller share of stocks, she must also accept a average annual return. Suppose Valerie currently allocates 25% of her portfollo to a diversined group of stocks and 75% of her portfolio to risk-free bonds; that is, she chooses combination B. She wants to increase the average annual return on her portfolio from 2% to 4%. In order to do so, she must do which of the following? Check all that apply. O Sell some of her stocks and place the proceeds…arrow_forwardA zero-coupon bond is a bond that is sold for less than its face value (that is, it is discounted) and has no periodic interest payments. Instead, the bond is redeemed for its face value at maturity. Thus, in this sense, interest is paid at maturity. Suppose that a zero-coupon bond sells for $8,500 and can be redeemed in 20-years for its face value of $38,000. What is the annual compound rate of return? Annual compound rate = % (Round to two decimal places as needed.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage LearningBrief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage LearningEssentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337794992/9781337794992_smallCoverImage.jpg)
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337091985/9781337091985_smallCoverImage.gif)
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337091992/9781337091992_smallCoverImage.gif)
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning