Reference no: EM131303353
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 5.0%. The probability distributions of the risky funds are:
Expected Return Standard Deviation
Stock fund (S) 11 % 40 %
Bond fund (B) 6 % 20 %
The correlation between the fund returns is .0500.
Suppose now that your portfolio must yield an expected return of 9% and be efficient, that is, on the best feasible CAL.
a. What is the standard deviation of your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Standard deviation %
b-1. What is the proportion invested in the T-bill fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Proportion invested in the T-bill fund %
b-2. What is the proportion invested in each of the two risky funds? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Proportion Invested
Stocks %
Bonds %
|
Misleading to compare company financial ratios
: Why is it sometimes misleading to compare a company’s financial ratios with those of other firms that operate in the same industry?
|
|
Your realized yield be over three-year holding period
: Three years ago, Joe bought a 5-year, 10% coupon paid semiannually bond for $1000. Currently, with interest rates having risen sharply, the bond is selling for $800 and you decide to sell it off. If you had re-invested the semi-annual coupons as you ..
|
|
What is annual rate of return you earned investment horizon
: In 2009, you purchased a 10 year, 8% semiannual coupon bond with $1000 par value. The YTM on comparable 10 year securities at the time of the purchase was 6% compounded semi-annually. If you could sell it today (2010) for $1, 091.50, what is the annu..
|
|
What annual rate of return is earned
: What annual rate of return is earned on a $1,000 investment when it grows to $1,500 in four years?
|
|
What is the proportion invested in each of two risky funds
: 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 5.0%. What is the standard devia..
|
|
The current market rate for similar bonds
: Roy is interested in buying a five-year bond that pays a coupon of 10 percent on a semiannual basis. The current market rate for similar bonds is 8.8 percent. He was offered the bond by a friend at a price of 1,100. Should he buy the bond from his fr..
|
|
What is current yield on these bonds
: Do-Well bonds have a face value of $1,000 and are currently quoted at 867.25. The bonds have a 7 percent coupon rate. What is the current yield on these bonds?
|
|
Home mortgage comparison
: Mark and Alicia Story, recently married, have decided that they want to buy a $600,000 house. They are planning to give 20% down payment and finance the rest with a mortgage. What are the monthly payments for the 4 traditional mortgages? If the Story..
|
|
Find the cost function when unit are manufactured
: An electronic manufacturer makes several types of surge protectors. their base model surge protector has monthly fixed costs of $1045. this particular model costs $4.50 per unit to manufacture and sells at a wholesale price of $10 per unit. find the ..
|