Financial planner Charlie Labrador recommends to his client to invest $100,000 of her life savings in...
Financial planner Charlie Labrador recommends to his client to invest $100,000 of her life savings in a bond mutual fund with an expected return of 5% and standard deviation of 15% and the remaining $300,000 of her savings in a stock mutual fund with an expected return of 10% and standard deviation of 35%. The correlation between the two funds is 0.4. What would be the standard deviation of her total portfolio?
Homework Answers
Weight of Bond Mutual Fund =100000/(100000+300000) =0.25
Weight of Stock Mutual Fund =1-0.25 =0.75
Standard Deviation of Her total Portfolio =((Weight of
Bond*Standard Deviation)^2+(Weight of Equity*Standard Deviation
)^2+2*Weight of Bond*Standard Deviation*weight of Equity*Standard
Deviation*Correlation))^0.5
=(0.25*15%)^2+(0.75*35%)^2+2*0.25*0.75*15%*35%*0.4)^0.5 =27.96%
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Financial planner Charlie Labrador
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You are constructing a risky portfolio for a client, to be comprised of both an equity...
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are constructing a risky portfolio for a client, to be comprised of
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of the two funds are guven below. The correlation between the two
funds is 0.10.
QUESTION 11
11.) For an investor with a risk-acersion score (A) of 4,
identify the portfolio he woud rationally select.
a) what is the expected return of this portfolio?
b) what is the standard devistion of this portfolio?
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Problem 7-7 10 points 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 9%. The probability distribution of the risky funds is as follows: eBook Expected Return 20% 11 Standard Deviation 35% Print Stock fund (5) Bond fund (B) 15 References The correlation between the fund returns is 0.09. Solve...
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A pension fund manager is considering three mutual funds. The first is a stock fund, the...
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Problem 7-4 A pension fund manager is considering three mutual funds. The first is a stock...
Problem 7-4 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 17% Standard Deviation 35% 18 Stock fund (S) Bond fund (5) The correlation between the fund returns is 0.09 0-1. What are the investment proportions in...
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 5%. The
probability distribution of the risky funds is as follows:
Expected Return 20% Standard Deviation 35% 15 Stock fund (5) Bond fund (B) The correlation between the fund returns is 0.09. You require that your portfolio yield an expected return...
Check my work mode: This shows what is correct or incorrect for the work you have...
Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does Problem 7-7 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 6%. The probability distribution of the risky funds is as follows: Expected Return 16% Standard Deviation Stock fund...
You
are constructing a risky portfolio for a client, to be comprised of
both an equity fund and a bond fund. The probability distributions
of the two funds are guven below. The correlation between the two
funds is 0.10.
QUESTION 11
11.) For an investor with a risk-acersion score (A) of 4,
identify the portfolio he woud rationally select.
a) what is the expected return of this portfolio?
b) what is the standard devistion of this portfolio?
Use the following...
You are an investment manager considering two mutual funds. The first is an equity fund and the second is a long- term corporate bond fund. It is possible to borrow or to lend limitless sums safely at 1.25%pa. The data on the risky funds are as follows: Fund Expected return Expected standard deviation Equity Fund 8% 16% Bond Fund 3% 5% The correlation coefficient between the fund returns is 0.10 a You form a risky portfolio P that is equally...
Problem 7-7 10 points 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 9%. The probability distribution of the risky funds is as follows: eBook Expected Return 20% 11 Standard Deviation 35% Print Stock fund (5) Bond fund (B) 15 References The correlation between the fund returns is 0.09. Solve...
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Problem 7-4 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 17% Standard Deviation 35% 18 Stock fund (S) Bond fund (5) The correlation between the fund returns is 0.09 0-1. What are the investment proportions in...
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 5%. The
probability distribution of the risky funds is as follows:
Expected Return 20% Standard Deviation 35% 15 Stock fund (5) Bond fund (B) The correlation between the fund returns is 0.09. You require that your portfolio yield an expected return...
Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does Problem 7-7 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 6%. The probability distribution of the risky funds is as follows: Expected Return 16% Standard Deviation Stock fund...
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