Reference no: EM132073515
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 5.2%. The probability distributions of the risky funds are:
Expected Return Standard Deviation
Stock fund (S) 13 % 42 %
Bond fund (B) 6 % 36 %
The correlation between the fund returns is .0222.
Suppose now that your portfolio must yield an expected return of 12% 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 %
|
What is your interpretation of the company revenues
: What information do you think that you might have access to, as a manager of the firm, that an outsider would not? What is your interpretation of the company's?
|
|
Arbitrage trade-profit using the price you were quoted
: What is the correct theoretical futures price? What is the arbitrage trade/profit using the price you were quoted?
|
|
Solve the differential equation
: Solve the differential equation y' = x + y
|
|
Calculate the present value of the corporate bonds
: The Reuth Corporation plans to issue $20,000,000 of 10-year bonds at par next June, with semiannual interest payments. The company's current cost of debt.
|
|
What is the proportion invested in each of two risky funds
: What is the standard deviation of your portfolio? What is the proportion invested in each of the two risky funds?
|
|
Describe three advantages of green it
: With a focus on enterprise hardware, software, services, and human capital, list and describe three advantages of green IT.
|
|
What is the cash flow from disposal
: Reversing Rapids Co. purchases an asset for $106,558. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages.
|
|
Relationship between concept of net present and shareholder
: What is the relationship between the concept of net present and shareholder with maximization?
|
|
Advantage of managing a diverse workforce
: Which of the following is an advantage of managing a diverse workforce?
|