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A hedge fund currently has a portfolio of securities with an expected return of 12% and a standard deviation of 20%. It is considering reallocating 20% of its assets to a catastrophe bond with an expected return of 6% and a standard deviation of 30%. The catastrophe bond has zero correlation with the other securities in the portfolio. If it does the reallocation, it would sell a proportionate amount of all of its existing securities, so that the funds not reallocated would have the same expected return and standard deviation as the original portfolio (12% and 20%). Calculate the expected return and standard deviation of the portfolio with the catastrophe bond. Label the graph below with the expected return on the vertical axis and standard deviation on the horizontal axis. Plot and label the hedge fund's current portfolio and the portfolio with the catastrophe bond. Do you think reallocating the portfolio is a good idea? __________ Briefly explain why it is possible for someone else to answer the previous question differently than you.
we receive a 200000 mortgage from the gensinger bank for 100 years. a vp at the bank robert tells us to fully amortize
Delta Corporation earned $2.50 per share during fiscal year 2008 and paid cash dividends of $1.00 per share. What is Delta's payout ratio for fiscal year 2008?
you have been asked by the director of finance to put together a plan to invest in other companies. your plan will
a. evaluate the accounting for investments when holding between 20 and 50 of equity securities of an investee from the
If a corporation were to choose between issuing a debenture, a mortgage bond, or a subordinated debenture, everything else equal (such as coupon rate, maturity, etc.) which would sell for the greatest price?
if you take out an 8000 car loan that calls for 48 monthly pauments at an apr of 10 what is your monthly payment? what
The gross annual return on the fund's shares was 9%. What was your net annual rate of return to the nearest basis point? 6.25% 4.52% 3.33% 4.64% 7.64%
Suppose XYZ stock pays no dividends and has a current price of $50. The forward price for delivery in 1 year is $55. Suppose the 1-year eective annual interest rate is 10%.
The company is also expected to repay $7,000 on an outstanding loan during 2012, and their NIAT is expected to be $2,500. The company does not pay dividends. What is the amount of external financing the company requires?
What is the market value of the firm (equity plus debt) after the change in capital structure? d. What is the debt ratio after the change in structure? e. Who (if anyone) gains or loses?
hudson marine has been an authorized dealer for campd marine radios for the past seven years. the number of radios sold
Identify and describe the fundamental components of a telecommunications system.
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