b) You need to analyse the type of investment skills the fund managers have employed and suggest how improve the funds's performances in the future. Below is the historical performance for two (2) different funds, the Kuala Lumpur composite Index (KLCI) and the 30-days Malaysia Treasury bill. Employ the data and analyse according to the questions below: Investment fund CIMB Small cap fund Public Bank fund KLCI 30 days-T-Bill i) ii) iii) Average rate of return Standard deviation 25.5% 20% 18% 2.4% 18% 13% 15% 0% Beta 1.45 0.8 Calculate the fama overall performance measure for both funds Compute the expected return to risk for both fund Compute the measure of selectivity, diversification, and net selectivity
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- Calculate the contribution to total performance from currency, country, and stock selection for the manager in the example below. All exchange rates are expressed as units of foreign currency that can be purchased with 1 U.S. dollar. (Do not round intermediate calculations. Round your answers to 2 decimal places. Input all amounts as positive values.) Return on Manager's Weight 0.45 Manager's Return EAEE Meight Equity Index Europe Australasia 0.1 14 14 1.2 0.6 0.3 0,95 1.4 0.56 -0.01 161 21 21 Far East 19 Profit/Lose Currency Selection Country Selection relative to EAFE relative to EAFE relative to EAFE Stock Selection(Ch7) Historically, the default rate on a commercial loan is 20 percent. If a bank makes 100 commercial loans, what is the approximate probability that more than 25 loans will result in default? (hint: use the normal approximation to the binomial. And, by continuity correction, you should use 25.5 as the new cutoff.) Question 2Select one: a. 0.0668 b. 0.0838 c. 0.2000 d. 0.0336Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. Q2 Briefly describe the difference in the bond market in general and the stock market in the context of investment and return. Why is corporate bond investment usually riskier than investing in US Treasury securities? Q3. Estimate the rate of return (yield to maturity) if you as an investor purchase a one-year US TN at the market price of $955 with an FV of $1,000. Make sure you show the numerical estimation by using the yield equation. Q4. Draw a hypothetical demand and supply curve for S&P 500 stocks and briefly explain the effects of unexpected increase in inflation rate caused by a sudden rise in energy prices. Q5. Draw a demand and supply curve of the loanable funds market and explain the effects on equilibrium prices and quantities of loanable funds in response to the situation described in Q4. Q6. Suppose the increase in…
- The following table shows the total return and the number of funds for four categories of mutual funds. Excel File: data03-17.xlsx Type of Fund Number of Funds Total Return (%) Domestic Equity 9,191 4.65 International Equity 2,621 18.15 Specialty Stock 1,419 11.36 Hybrid 2,900 6.75 a. Using the number of funds as weights, compute the weighted average total return for these mutual funds. (to 2 decimals) b. Is there any difficulty associated with using the "number of funds" as the weights in computing the weighted average total return in part (a)? Discuss. What else might be used for weights? (i) Using "number of funds" as weights will only be a good approximation if the amount invested in various funds is approximately equal. The amount invested in each fund could be used for weights. (ii) Using "number of funds" as weights results in a good approximation regardless of the amount invested in various funds. There is no need to use a different weight. (iii) Using "number of…In a time series regression of the excess return of a mutual fund on a constant and the excess return on a market index, which of the following statements should be true for the fund manager to be considered to have “beaten the market” in a statistical sense? Select one: a. The estimate for Beta (parameter) should be positive and statistically significant b. The estimate for Beta (parameter) should be positive and statistically significant c. The estimate for Beta (parameter) should be positive and statistically significantly greater than the risk-free rate of return d. The estimate for Beta (parameter) should be negative and statistically significant.The effect of a stock dividend on the balance sheet is to: Select one: A. decrease the number of common outstanding stock B. decrease current assets C. increase long-term assets D. increase the number of common outstanding stock When allocating dividends assuming cumulative preferred dividends, the following order is used: Select one: A. current year preferred, prior year preferred, current year common B. current year preferred, current year common C. current year common, current year preferred D. prior year preferred, current year preferred, curent year common
- Person A, Person B and Person C own stock in the same company. All of them are loss averse and have the same value function: v(x) = x/2 for gains and v(x) = 2x for losses. The stock's price is shown in the graph below (a) 100 90 80 70 60 50 40 30 20 10 0 60 90 Stock Price 95 70 50 October November December January Feburary 80 March Person A bought the stock in November and uses the purchase price as their reference point. If you ask them, how much would they say that they lost in terms of value when the price dropped from £95 to £70? (b) Person B bought the stock in October and uses the peak price as their reference point. If you ask them, how much would they say that they lost in terms of value in January? (c) In January, which month should Person B rather use as reference point in order to maximize their value? (d) [ Person C bought the stock in March. They expect to derive a value of at least +5 in April as compared to their reference point of the purchase price. What is the minimum…Give correct typing answer with explanation and conclusion What are the strengths and weaknesses of investment performance of Foreign & Colonial Investment Trust PLC for 2019 to 2021.The Beta of a stock is very popular concept in CAPM. One decade ago, a lot of researchers have pointed out a theory (Namely theory Beta ) the stocks with low empirically estimated historical beta tend to outperform stocks with high historical beta. Could you please use the stocks in SSE 50 to demonstrate whether the theory Beta still applies to current stock market?
- Q2. Asset Allocation The company's pension plan is managed by Castle Fund Managers, a leading provider of pension services. It is a defined contribution plan, where the employees' contributions are matched by the employer. Each employee had to choose one of the following investment options for their individual plans: a. Preferred Accumulator (PA): Short-term focusb. Balanced Accumulator (BA): Medium-term focus c. Select Accumulator (SA): Long-term focus However, there has been some concern raised over how the pension fund is being managed. Some employees are upset that Castle Fund Managers uses a diversified asset allocation strategy for its investment. Illustrate a short report which explains: a. The importance of strategic asset allocation,b. Three (3) benefits of using this approach,c. Three (3) factors that could affect how assets are allocated.Question A. How do individual companies respond to economic forces throughout the globe? One way to explore this is to see how well rates of return for stock of individual companies can be explained by stock market indexes thar reflect particular parts of the world. The table below shows monthly rates of return for two companies, Microsoft (headquartered in the United States) and China Telecom (in China), along with three indexes: the Hang Seng (Hong Kong), the FTSE 100 (London), and the S&P 500 (New York). 1. Which index most explains changes in Microsoft’s stock price? a. Run three separate regressions (one for each of the indexes) to assess the percentage changes in Microsoft stock explained by each of the three indexes. Report the adjusted r-square and p-value of the coefficient for each index. Which indexes, if any, are significant? b. Now run a single multivariate regression model with all three indexes included. Which indexes, if any, are now considered significant? Report…stion 20 of 41 > You have some money to invest, and you don't really care about risk-the return is your sole focus. Which investment would probably be the most attractive to you? corporate bonds with a CCC rating corporate bonds with an AA rating government bonds large company stocks