Essentials Of Investments
11th Edition
ISBN: 9781260316193
Author: Bodie
Publisher: MCG
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Chapter 4, Problem 14PS
Reconsider the Fingroup Fund in the previous problem. 1f during the year the
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Suppose that every time a fund manager trades stock, transaction costs such as commissions and bid-ask spreads amount to 0.5% of
the value of the trade.
If the portfolio turnover rate is 55%, by how much is the total return of the portfolio reduced by trading costs? (Round your answer to 2
decimal places.)
Reduction in portfolio returns
%
Suppose that every time a fund manager trades stock, transaction costs such as commissions and bid–ask spreads amount to 2.8% of the value of the trade. If the portfolio turnover rate is 50%, by how much is the total return of the portfolio reduced by trading costs? (Round your answer to 1 decimal place.)
The composition of the Fingroup Fund portfolio is as follows:
Stock
Shares
Price
A
200,000
$ 35
B
288,000
34
C
406,000
26
D
660,000
25
During the year the portfolio manager sells all of the holdings of stock D and replaces it with 15,000 shares of stock E at $90 per share
and 202,000 shares of stock F at $75 per share.
Required:
What is the portfolio turnover rate?
Note: Round your answer to 1 decimal place.
Turnover rate
%
Chapter 4 Solutions
Essentials Of Investments
Ch. 4 - Prob. 1PSCh. 4 - Prob. 2PSCh. 4 - Prob. 3PSCh. 4 - Prob. 4PSCh. 4 - Prob. 5PSCh. 4 - Prob. 6PSCh. 4 - Prob. 7PSCh. 4 - Prob. 8PSCh. 4 - Prob. 9PSCh. 4 - Prob. 10PS
Ch. 4 - An open-end fund has a net asset value of $10.70...Ch. 4 - Prob. 12PSCh. 4 - The composition of the Fingroup Fund portfolio is...Ch. 4 - Reconsider the Fingroup Fund in the previous...Ch. 4 - Prob. 15PSCh. 4 - Prob. 16PSCh. 4 - Prob. 17PSCh. 4 - Loaded-Up Fund charges a 12b-1 fee of 1% and...Ch. 4 - City Street Fund has a portfolio of $450 million...Ch. 4 - Prob. 20PSCh. 4 - Prob. 21PSCh. 4 - Prob. 22PSCh. 4 - Prob. 23PSCh. 4 - Prob. 24PSCh. 4 - Prob. 25PSCh. 4 - Prob. 26PSCh. 4 - Prob. 27PSCh. 4 - You expect a tax-free municipal bond portfolio to...Ch. 4 - Prob. 29PSCh. 4 - Prob. 30CCh. 4 - Prob. 1WMCh. 4 - Prob. 2WMCh. 4 - Prob. 3WM
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