Asset allocation would most fit their retirement portfolio

Assignment Help Financial Management
Reference no: EM131049667

Ron and Mary are investors and they will be retiring in the next 5 years. They have a conservative risk tolerance. Which asset allocation would most fit their retirement portfolio needs, and why? A) 90% equities and 10% fixed income B) 50% equities and 50% cash/cash equivalents c) 70% fixed income and 30% cash/cash equivalents

Reference no: EM131049667

Questions Cloud

How much are you willing to pay for this common stock : You will buy a common stock that will pay $0.50 dividend next year and the dividend will grow at an annual rate of 5%. The dividend payments are expected to go on indefinitely. If your required rate on this common stock is 10%, how much are you willi..
Call and sell put option on same underlying-trading strategy : If you buy a call and sell a put option on the same underlying, at the same strike price, with the same option maturity, your possible payoff will look exactly like what other trading strategy? Explain. (Both options are European.)
You are the beneficiary of a life insurance policy : You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a lump sum of $50,000 today or receive payments of $641 a month for ten years. You c..
What is the amount of each mortgage payment : The McDonald Group purchased a piece of property for $1.5 million. It paid a down payment of 20% in cash and financed the balance. The loan terms require monthly payments for 15 years oat an annual percentage rate of 5% compounded monthly. What is th..
Asset allocation would most fit their retirement portfolio : Ron and Mary are investors and they will be retiring in the next 5 years. They have a conservative risk tolerance. Which asset allocation would most fit their retirement portfolio needs, and why? A) 90% equities and 10% fixed income B) 50% equities a..
Scheduled to receive annual payments : You are scheduled to receive annual payments of $10,000 for each of the next 25 years. Your discount rate is 8.5%. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each ..
Predict price of common stock : Price of Common Stock = 71 1/7; You predict Price of Common Stock will go to 99.99. With option premiums at 8 1/2%, a) Which option will make you the MOST money, assuming you are right? b) You have absolutely NO CLUE which way the market will turn af..
Bond is currently priced-what is the yield to maturity : Otto Enterprises has a 15-year bond issue outstanding that pays a 9% coupon. The bond is currently priced at $894.60 and has a par value of $1,000. Interest is paid semiannually. What is the yield to maturity?
The increase in net working capital and capital spending : Ward Corp. is expected to have an EBIT of $2,350,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $174,000, $103,000, and $124,000, respectively. What is the price per share of the company's st..

Reviews

Write a Review

Financial Management Questions & Answers

  Standard deviation of return on your clients portfolio

You manage an equity fund with an expected risk premium of 11.2% and a standard deviation of 26%. The rate on Treasury bills is 4.2%. Your client chooses to invest $70,000 of her portfolio in your equity fund and $30,000 in a T-bill money market fund..

  Comment on the acceptability of the project

Calculate the net present value (NPV) for a 25-year project with an initial investment of $20,000 and a cash inflow of $2,000 per year. Assume that the firm has an opportunity cost of 16%. Comment on the acceptability of the project.

  What is the highest interest rate-refinance the mortgage

A homeowner took out a 30-year, fixed-rate mortgage of $310,000. The mortgage was taken out 10 years ago at a rate of 7.50 percent. If the homeowner refinances, the charges will be $2,500. What is the highest interest rate at which it would be benefi..

  Level outlay under amortization method with interest rate

Show that the borrower’s periodic outlay for a standard sinking fund method repayment at rate j is larger than the level outlay under amortization method with the interest rate i, if i > j.

  Equity account on the balance sheet and earnings

What is the relationship between the equity account on the Balance Sheet and Earnings (Net Income) reported on the Income Statement?

  About weighted average cost of capital

Explain under what circumstances the book value cost of capital should be used. Explain why you answered as you did. Explain under what circumstances the market value cost of capital should be used. Explain why you answered as you did.

  Planning to lease a computer

Royal Troon Inc is planning to lease a computer for $6,500 per annum, payable in advance, for a period of 4 years. The lease will cover maintenance expenses. Royal Troon’s chairman feels that if he buys the same computer he should be able to sell it ..

  Depreciation and amortization expense

Sky Corporation recently reported an EBITDA of $ 31.1 million and net income of $9.7 million. The company had $ 6.8 in interest expense, and its average corporate tax rate was 35%. What was its depreciation and amortization expense? Please show your ..

  Make semiannual payments-what is the current bond price

App Store Co. issued 15-year bonds one year ago at a coupon rate of 7.1 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.4 percent, what is the current bond price?

  Retirement amount

Eugene began to save for his retirement at age 32, and for 10 years he put $ 275 per month into an ordinary annuity at an annual interest rate of 8% compounded monthly. After the 10 years, Eugene was unable to make the monthly contribution of $ 275, ..

  To pay employees due to a temporary cash-flow problem

Which of the following loan requests by an off-campus pizza parlor would be unacceptable, and why? a. To buy cheese for inventory b. To buy a pizza heating oven c. To buy a car for the owner d. To repay the original long-term mortgage used to buy the..

  Assume tax rate-debt-current price-semiannual coupon payment

Calculate the WACC based on the following information. Assume tax rate is 35%. Debt: $10M face value, current price $10.8M, 6.4% coupon rate, 25 years to maturity, semiannual coupon payment. (Hint: cost of debt is YTM of the bond) Equity: 495,000 sha..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd