Problem 4-24 a. You expect a tax-free municipal bond portfolio to provide a rate of return...

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Problem 4-24 a. You expect a tax-free municipal bond portfolio to provide a rate of return of 4.7%. Management fees of the fu

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Answer 1

Answer #1

Required a: The fraction of portfolio income given as fees is:

Bond fee = (0.67 / 4.7) * 100

= 14.3%

Required b: The fraction of portfolio income given as fees is:

Equity fee = (0.67 / 19) * 100

= 3.5%

Required c: Bond fund

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Answer 2

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Problem 4-24 a. You expect a tax-free municipal bond portfolio to provide a rate of return...

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