For your risky investment, you choose a stock index fund. You're optimistic about stock returns going...
For your risky investment, you choose a stock index fund. You're optimistic about stock returns going forward but you think their volatility is going to be higher than in the past. Specifically, you expect the stock index fund's return to be 15% and you think its standard deviation will be 30%.
(2) How would you split your money if you wanted to limit the risk of your portfolio so that its standard deviation would be 20%?
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For your risky investment, you choose a stock index fund. You're
optimistic about stock returns going...
For your risky investment, you choose a stock index fund. You're optimistic about stock returns going...
For your risky investment, you choose a stock index fund. You're optimistic about stock returns going forward but you think their volatility is going to be higher than in the past. Specifically, you expect the stock index fund's return to be 15% and you think its standard deviation will be 30%. The risk-free interest rate is 5%. (1) How would you split your money between the stock fund and Treasuries if you wanted a return of 12%? (You're willing to settle...
A pension fund manager is considering three mutual funds. The first is a stock fund the second is...
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 5.5%. The probability distributions of th risky funds are The following data apply to Problems 8-12. Standard Deviation 32% 23 Expected Return 15% Stock fund (S Bond fund (B) The correlation between the fund returns is.15 8. Tabulate and draw...
Assume that you manage a risky portfolio with an expected rate of return of 18% and...
Assume that you manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 34%. The T-bill rate is 4%. Your client chooses to invest 85% of a portfolio in your fund and 15% in a T-bill money market fund. a. What is the expected return and standard deviation of your client's portfolio? (Round your answers to 2 decimal places.) Expected return % per year Standard deviation % per year b. Suppose your risky...
Suppose you invest your risky portfolio into one stock and one corporate bond. 50% of your...
Suppose you invest your risky portfolio into one stock and one corporate bond. 50% of your fund is invested in a stock with an expected return of 14% and a standard deviation of 24%. The rest 50% of your fund is invested in a corporate bond with an expected return of 6% and a standard deviation of 12%. The stock and the bond have a correlation of 0.55. What are the expected return and the standard deviation of the resulting...
Your client has his retirement portfolio allocated with 80% in an index fund designed to replicate S&P500 returns an...
Your client has his retirement portfolio allocated with 80% in an index fund designed to replicate S&P500 returns and 20% in an index fund replicating Nasdaq market returns. S&P500 returns have an annual standard deviation of 24%, Nasdaq returns have standard deviation of 32%, and the correlation between the two market returns has historically been 0.85. Given this information, what is the expected standard deviation of your client's portfolio?
3. You have a risky portfolio that yields an expected rate of return of 15% with...
3. You have a risky portfolio that yields an expected rate of return of 15% with a standard deviation of 25%. Draw the CAL for an expected return/standard deviation diagram if the risk free rate is 5%. a. What is the slope of the CAL? b. If your coefficient of risk aversion is 5, how much should you invest in the risky portfolio? 4. A pension fund manager is considering three mutual funds. The first is a stock fund, the...
finance help please 1. Assume that you manage a risky portfolio with an expected rate of...
finance help please
1. Assume that you manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. a) What is the expected value and standard deviation of the rate of return on his portfolio? b) Suppose that your risky portfolio includes the following investments in the given...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
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 5.5%. The probability distributions of the risky funds are: Expected Return 15% Stock fund (5) Bond fund (B) Standard Deviation 32% 23% 9% The correlation between the fund returns is 0.15. a. What would be the investment proportions of...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
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 rate of 8%. The probability distribution of the risky fund is as follows: Expected Return 16% 12 Standard Deviation 35% 15 Stock fund (5) Bond fund (B) The correlation between the fund returns is 0.13. a-1. What are the investment proportions in the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
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 rate of 8%. The probability distribution of the risky funds is as follows: Expected Return 19% Standard Deviation 31% 23 Stock fund (S) Bond fund (B) 14 The correlation between the fund returns is 0.10. a-1. What are the investment proportions in the...
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 5.5%. The probability distributions of th risky funds are The following data apply to Problems 8-12. Standard Deviation 32% 23 Expected Return 15% Stock fund (S Bond fund (B) The correlation between the fund returns is.15 8. Tabulate and draw...
finance help please
1. Assume that you manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. a) What is the expected value and standard deviation of the rate of return on his portfolio? b) Suppose that your risky portfolio includes the following investments in the given...
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 5.5%. The probability distributions of the risky funds are: Expected Return 15% Stock fund (5) Bond fund (B) Standard Deviation 32% 23% 9% The correlation between the fund returns is 0.15. a. What would be the investment proportions of...
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 rate of 8%. The probability distribution of the risky fund is as follows: Expected Return 16% 12 Standard Deviation 35% 15 Stock fund (5) Bond fund (B) The correlation between the fund returns is 0.13. a-1. What are the investment proportions in the...
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 rate of 8%. The probability distribution of the risky funds is as follows: Expected Return 19% Standard Deviation 31% 23 Stock fund (S) Bond fund (B) 14 The correlation between the fund returns is 0.10. a-1. What are the investment proportions in the...
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