Question

I need help calculating all kf these questions. Really stuck on all of them! Thank you!

Year using the returns for the first three years. The next rolling ace would be calculated using the returns from Years 2. 3. and 4, and so on Using the annual returns for large company stocks and Treasury bills, calculate both the 5- and 10-year rolling average return and standard deviation. h Over how many 5-year periods did Treasury bills outreform Caree company stocks? How many 10-year periods? c. Over how many 5-year periods did Treasury bills have a larger standard deviation than large company stocks? Over how many 10-year periods? d. Graph the rolling S-year and 10-year average returns for large company stocks and Treasury bills. e. What conclusions do you draw from the above results? Mini Case A JOB AT EAST COAST YACHTS You recently graduated from college, and your job search led you to East Coast Yachts. Because you felt the company's business was seaworthy, you accepted a job offer. The first day on the job, while you are finishing your employment paperwork, Dan Ervin, who works in Finance. stops by to inform you about the company's 401(k) plan. A 401(k) plan is a retirement plan offered by many companies. Such plans are tax- deferred savings vehicles, meaning that any deposits you make into the plan are deducted from your current pretax income, so no current taxes are paid on the money. For example, assume your salary will be $50,000 per year. If you contribute $3,000 to the 401(k) plan. you will pay taxes on only $47.000 in income. There are also no taxes paid on any capital gains or income while you are invested in the plan, but you do pay taxes when you withdraw money at retirement. As is fairly common, the company also has a 5 percent match. This means that the company will match your contribution up to 5 percent of your salary, but you must contribute to get the match The 401(k) plan has several options for investments, most of which are mutual funds. A mutual fund is a portfolio of assets. When you purchase shares in a mutual fund, you are actu- ally purchasing partial ownership of the fund's assets. The return of the fund is the weighted average of the return of the assets owned by the fund, minus any expenses. The largest expense is typically the management fee paid to the fund manager. The management fee is compensa tion for the manager, who makes all of the investment decisions for the fund, East Coast Yachts uses Bledsoe Financial Services as its 401(k) plan administrator, Here are the investment options offered for employees Company Stock One option in the 401(k) plan is stock in East Coast Yachts. The company is currently privately held. However, when you interviewed with the owner, Larissa Warren she informed you the company was expected to go public in the next three to four years Until then, a company stock price is simply set each year by the board of directors Bledsoe S&P 500 Index Fund This mutual fund tracks the S&P 500. Stocks in the fund are weighted exactly the same as the S&P 500. This means the fund return is approximately the return on the S&P 500, minus expenses. Because an index fund purchases assets based on the composition of the index it is following the fund manager is not required to research stocks and make investment decisions. The result is that the fund expenses are usually low. The Bledsoe S&P 500 Index Fund charges expenses of 15 percent of assets per year. Bledsoe Small-Cap Fund This fund primarily invests in small-capitalization stocks As such the returns of the fund are more volatile. The fund can also ingest 10 percent of its assets in companies based outside the United States. This fund charges 1.70 percent in expenses.

Answer 1

Introduction:

Investment planning is an imporatnt component in Financial Planning.Most commonly we use cash, equities,bonds.etc

All these may vary with price,risk,management and other factors also.

1.Mutual fund offer to company stock:

The mutual fund offer to company stock which include in the portfolio management .In Mutual Fund ,many investor come together to invest share ,stock,bonds and other securities.It also includes advanced Portfolio Managment,dividevd reinvestment,risk reduction, convience,and fair pricing.Mutual fund also provide diversification through exposure of multiple stock.

In Mutual Fund it is very simple to invest,proffessionally managed,gives higher return,and it also to switch to other schemes, transparency, etc.,Technoology stock are good example for Mutual fund.It is also a better investment because they offer more diversification.

2.EAR :

Assume My Salary is $ 5ooo and i invest 5% of my salary,then:

$5000 * 5% = $250.

I will be able to match my salary ,therefore ,the return are also encouraging one, and there is no worries.The investors has many option to invest and also to puchase additional shares which also help in the investment growth.

Conclusion:

Investment is prime factor for future stability.And investor also have Right to choose an investment plan which also provide better returns.Investor also can invest in short and also in long term process,then there will better returns.

5. Sharp Ratio :

Sharp Ratio = 10years Annual Return - Risk Free Return / Standard deviation

	10-year Annual Return	SD	Sharp Ratio
Bledsoe S&P500 Indexed Fund	9.18%	20.43%	0.2927
Bledsoe Small cap Fund	14.12%	25.13%	0.4345
Bledsoe Large Company Stock fund	8.58%	23.82%	0.2259
Bledsoe Bond Fund	6.45%	9.85%	0.3299
Company Stock	15%	65%	0.1815
Risk Free Rate	3.20%

The sharpie ratio is more appropriate to use,the data which provides to forecast the expected returns.

6.Portfolio Allocation:

I select the small cap which gives the high returns,the S & P 500 always shows the moderate return.

the same way if Large cap Fund will charge higher than the S&P 500 fund.If you caompare the returns then Large Cap return is very less.

Most important thing is Financial Proffessional believe that allocation of asset is the important decison which investor can make.