Reference no: EM13907090
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.4%. The probability distributions of the risky funds are:
Expected Return Standard Deviation
Stock fund (S) 14% 34%
Bond fund (B) 5% 28%
The correlation between the fund returns is .14.
a) Solve the proportions of each asset and the expected return and standard deviation of the optimal risky portfolio. What is the reward-to-volatility ratio of the best feasible CAL?
b) Suppose now that your portfolio must yield an expected return of 13% and be efficient, that is, on the best feasible CAL.
b1). What is the standard deviation of your portfolio?
b2) What is the proportion invested in the T-bill fund and each of the two risky funds?
c) If you were to use only the two risky funds and still require an expected return of 13%, what would be the investment proportions of your portfolio? Compare its standard deviation to that of the optimal portfolio in the previous problem. What do you conclude?
|
Information about different automobile parts
: While entering the information about different automobile parts in the application, the database administrator enters the prices of some parts incorrectly. The prices are swapped between various parts.
|
|
Is the country foreign exchange overvalued or undervalued
: Is the country's foreign exchange overvalued or undervalued? Has the central bank intervened in the foreign exchange market on behalf of the country's currency valuation?
|
|
What is its self-supporting growth rate
: Maggie's Muffins, Inc., generated $2,000,000 in sales during 2015, and its year-end total assets were $1,400,000. Also, at year-end 2015, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..
|
|
Formulate situation as strategic game and find equilibria
: Formulate this situation as a strategic game and find all its mixed strategy equilibria. (First argue that in every equilibrium B assigns probability zero to the action of allocating one division to each pass.
|
|
Government and corporate bond fund-T-bill money market fund
: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.4%. What is the standard devia..
|
|
Lexi company forecasts unit sales
: Lexi Company forecasts unit sales of 1,040,000 in April, 1,220,000 in May, 980,000 in June, and 1,020,000 in July.
|
|
Identify the case and describe when and where it occurred
: Identify the case and describe when and where it occurred. Be sure to summarize the case thoroughly. Identify at least 2 unethical behaviors from the case and explain why they are unethical
|
|
What monetary policies do you think caused the crisis
: Based on the analysis of the data, share your thoughts on what caused the financial crisis and whether the United States is going in the right or wrong direction with its current policies.
|
|
What is your estimate of the stocks current price
: A company currently pays a dividend of $2.75 per share (D0 = $2.75). It is estimated that the company's dividend will grow at a rate of 25% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of..
|