Reference no: EM13895240

Question 1:

a. Present, discuss, and explain the investment policy for the portfolio.
b. What were the returns during the period you managed the portfolio?
c. What returns do you expect the portfolio would produce over 1 year? 5 years? And why?

Question 2
a. Explain how the investments that were selected are consistent with the investment policy statement?
b. What changes would you recommend for the investment policy statement?

Question 3:

a. What is the beta of the stock portfolio and is it consistent with the risk objectives in the investment policy statement?
b. Would you recommend that the portfolio assume more, or less, risk? Why?

Question 4
What were the most important things learned from the construction and management of the portfolio?

1- Explain the differences in how modern and traditional theories of portfolio management approach the issue of diversification.

Explain the basic concept of bond duration and why this measure is meaningful to investors.

2- What is the difference between a naked call option and a covered call option? Which one is riskier and why?

Last month when IBM was selling for $86, Dan purchased a call option on IBM with an exercise price of $90 for $2 per option or $200 total. Yesterday IBM closed at $95. Based on the minimum value of the contract, if Dan sells his call at yesterday's close, what would his return be?

3-The futures market contains two basic types of traders: hedgers and speculators. Define the role played by each of these types of traders. All futures contracts are traded on a margin basis. What does "margin" mean, and how does the use of margin affect the inherent risk-return nature of the futures market?