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ASSET ALLOCATION Sharon has a total of
Hint: The constraint for the average risk factor for the investment is given by
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Finite Mathematics for the Managerial, Life, and Social Sciences-Custom Edition
- The chartered financial analyst (CFA) is a designation earned after taking three annual exams (CFA I,II, and III). The exams are taken in early June. Candidates who pass an exam are eligible to take the exam for the next level in the following year. The pass rates for levels I, II, and III are 0.51, 0.74, and 0.85, respectively. Suppose that 3,000 candidates take the level I exam, 2,500 take the level II exam and 2,000 take the level III exam. A randomly selected candidate who took a CFA exam tells you that he has passed the exam. What is the probability that he took the CFA I exam? Probability =arrow_forwardBlair & Rosen, Inc. (B&R), is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has a maximum of $70,000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 8%, whereas the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $45,000 of the client's funds should be invested in the Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 6 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 6(10) +…arrow_forwardMore than 50,000 state and local governments and their agencies borrow money by issuing municipal bonds to build, repair, or improve schools, streets, highways, hospitals, sewer systems, and so on. When the federal income tax law was adopted in 1913, interest on municipal bonds was excluded from federal taxation. As a result, municipal bond investors are willing to accept lower yields than those they can obtain from taxable bonds. As part of your portfolio, you are considering investing $70,000 in bonds. You have the choice of investing in tax-exempt municipal bonds yielding 2.75% or corporate bonds yielding 4% in taxable interest income. (a)What is the annual interest income (in $) and tax status of the municipal bond investment? (b)What is the annual interest income (in $) and tax status of the corporate bond investment? (c) If you are in the 32% marginal tax bracket for federal income taxes and your state and local taxes on that income amount to an additional…arrow_forward
- Consider the following table containing yields for mutual funds in different asset classes (small, mid, and large cap). Fund Yield by Asset Class Small Cap Mid Cap Large Cap Fund Yield (%) Fund Yield (%) Fund Yield (%) Explorer Value 2.04 Capital Value 0.96 Equity Income 3.24 Small-Cap Value Index Admiral 2.46 Mid-Cap Value Index Admiral 1.57 High Dividend Yield Index 3.50 Small-Cap Index Admiral Shares 1.49 Extended Market Index Admiral Shares 1.22 500 Index Admiral Shares 1.57 Strategic Small-Cap Equity 0.38 Mid-Cap Index Admiral Shares 1.52 Diversified Equity 1.23 Explorer 0.17 Mid-Cap Growth 2.76 FTSE Social Index 1.42 Small-Cap Growth Index Admiral 0.21 Capital Value 0.32 Growth Equity 2.52 Explorer Value 2.55 Strategic Equity 1.54 U.S. Growth 0.37 Small-Cap ETF 1.44 Capital Opportunity Admiral Shares 2.14 Windsor 1.64 sum of squares for treatmentssum of squares for error≈1.5986≈18.4205 Step 2 of 2 : Find the mean square for treatments. Round…arrow_forwardMore than 50,000 state and local governments and their agencies borrow money by issuing municipal bonds to build, repair, or improve schools, streets, highways, hospitals, sewer systems, and so on. When the federal income tax law was adopted in 1913, interest on municipal bonds was excluded from federal taxation. As a result, municipal bond investors are willing to accept lower yields than those they can obtain from taxable bonds. As part of your portfolio, you are considering investing $80,000 in bonds. You have the choice of investing in tax-exempt municipal bonds yielding 2.75% or corporate bonds yielding 4% in taxable interest income. (a) What is the annual interest income (in $) and tax status of the municipal bond investment? $ (b) What is the annual interest income (in $) and tax status of the corporate bond investment? $ (c) If you are in the 30% marginal tax bracket for federal income taxes and your state and local taxes on that income amount to an…arrow_forwardMore than 50,000 state and local governments and their agencies borrow money by issuing municipal bonds to build, repair, or improve schools, streets, highways, hospitals, sewer systems, and so on. When the federal income tax law was adopted in 1913, interest on municipal bonds was excluded from federal taxation. As a result, municipal bond investors are willing to accept lower yields than those they can obtain from taxable bonds. As part of your portfolio, you are considering investing $80,000 in bonds. You have the choice of investing in tax-exempt municipal bonds yielding 3.75% or corporate bonds yielding 5% in taxable interest income. (a) What is the annual interest income (in $) and tax status of the municipal bond investment? 2$ ---Select--- (b) What is the annual interest income (in $) and tax status of the corporate bond investment? 2$ ---Select---▼ (c) If you are in the 28% marginal tax bracket for federal income taxes and your state and local taxes on that income amount to an…arrow_forward
- Folgers purchased $147 million of mutual fund shares. The fund had total returns over a 3-year period: 4.11%, 3.56%, and 4.26%. The value at the end of the 3-year period is closest to A. $177.54 million. B. $170.06 million. C. $165.24 million. D. $153.26 million.arrow_forwardConsider the following table containing yields for mutual funds in different asset classes (small, mid, and large cap). Fund Yield by Asset Class Small Cap Mid Cap Large Cap Fund Yield (%) Fund Yield (%) Fund Yield (%) Explorer Value 2.27 Capital Value 0.96 Equity Income 3.24 Small-Cap Value Index Admiral 2.46 Mid-Cap Value Index Admiral 2.24 High Dividend Yield Index 3.50 Small-Cap Index Admiral Shares 1.49 Extended Market Index Admiral Shares 1.22 500 Index Admiral Shares 2.24 Strategic Small-Cap Equity 0.43 Mid-Cap Index Admiral Shares 1.52 Diversified Equity 1.23 Explorer 0.17 Mid-Cap Growth 2.18 FTSE Social Index 1.42 Small-Cap Growth Index Admiral 0.21 Capital Value 0.32 Growth Equity 0.31 Explorer Value 0.36 Strategic Equity 1.54 U.S. Growth 0.37 Small-Cap ETF 1.44 Capital Opportunity Admiral Shares 1.1 Windsor 1.64 sum of squares for treatments ≈ 2.0227 sum of squares for error Step 1 of 2: What are the degrees of freedom associated with the sum of squares for treatments?…arrow_forwardAnalyze and compare Foot Locker and The Finish Line The Foot Locker, Inc. (FL) and The Finish Line, Inc. (FINL) are two retail athletic footwear chains. The current assets and current liabilities from recent balance sheets for both companies are as follows (in millions): Foot Locker The Finish Line Year 2 Year 1 Year 2 Year 1 Current assets $2,606 $2,456 $521 $531 Current liabilities 700 696 221 191 a. Compute the working capital for Year 2 and Year 1 for each company. Foot Locker The Finish Line Year 2 $fill in the blank 1 $fill in the blank 2 Year 1 $fill in the blank 3 $fill in the blank 4 b. Compute the current ratio for Year 2 and Year 1 for each company. Round to one decimal place. Foot Locker The Finish Line Year 2 fill in the blank 5 fill in the blank 6 Year 1 fill in the blank 7 fill in the blank 8arrow_forward
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