A mutual fund company offers its customers a variety of funds: a money-market fund, three different bond funds (short, intermediate, and long-term), two stock funds (moderate and high-risk), and a balanced fund. Among customerswho own shares in just one fund, the percentages of customers in the different funds are as follows.Money-market21%High-risk stock16%Short bond12%Moderate-risk stock25%Intermediate bond6%Balanced15%Long bond5%A customer who owns shares in just one fund is randomly selected.What is the probability that the selected individual owns shares in the balanced fund?What is the probability that the individual owns shares in a bond fund?What is the probability that the selected individual does not own shares in a stock fund?

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Answered: A mutual fund company offers its…

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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More than 50,000 state and local governments and their agencies borrow money by issuing municipal bonds to build, repair, or improve schools, streets, highways, hospitals, sewer systems, and so on. When the federal income tax law was adopted in 1913, interest on municipal bonds was excluded from federal taxation. As a result, municipal bond investors are willing to accept lower yields than those they can obtain from taxable bonds. As part of your portfolio, you are considering investing $80,000 in bonds. You have the choice of investing in tax-exempt municipal bonds yielding 3.75% or corporate bonds yielding 5% in taxable interest income. (a) What is the annual interest income (in $) and tax status of the municipal bond investment? 2$ ---Select--- (b) What is the annual interest income (in $) and tax status of the corporate bond investment? 2$ ---Select---▼ (c) If you are in the 28% marginal tax bracket for federal income taxes and your state and local taxes on that income amount to an…
2. A venture capitalist, willing to invest $1,000,000, has three investments to choose from. The first investment, a software company, has a 11% chance of returning $5,000,000 profit, a 44% chance of returning $1,000,000 profit, and a 45% chance of losing the million dollars. The second company, a hardware company, has a 12% chance of returning $6,000,000 profit, a 24% chance of returning $2,500,000 profit, and a 64% chance of losing the million dollars. The third company, a biotech firm, has a 8% chance of returning $7,000,000 profit, a 37% of no profit or loss, and a 55% chance of losing the million dollars.Order the expected values from smallest to largest. first, third, second third, second, first second, first, third first, second, third second, third, first third, first, second
You have $600,000 and are considering investing in three municipal bond funds, Pimco, Fidelity Spartan, and Columbia Oregon. You have the following data: Cоmpany Yield PNF (Pimco NY) 7% FDMMX (Fidelity Spartan Mass) 5% CMBFX (Columbia Oregon) 4% Your broker has made the following suggestions: At least 50 percent of your total investment should be in CMBFX. No more than 10 percent of your total investment should be in PNF. How much should you invest in each fund to maximize your anticipated returns while following your broker's advice? a. $60,000 in PNF, $300,000 in FDMMX, and $240,000 in CMBFX O b. $60,000 in PNF, $240,000 in FDMMX, and $300,000 in CMBFX c. $300,000 in PNF, $60,000 in FDMMX, and $240,000 in CMBFX d. $300,000 in PNF, $240,000 in FDMMX, and $60,000 in CMBFX e. $240,000 in PNF, $300,000 in FDMMX, and $60,000 in CMBFX
Question 1 Consider an investor's choice of a farm unit in the Corn Belt, one in the Califormia Central Valley, or the one in the Great Plains region. An investor added these three assets in one portfolio. The portfolio composed of equal proportions of the three investments. Use the information in the table below to answer the questions that follows (show all your work for partial credits). Investment Alternatives Corn Belt (1) Central Valley (2) Great Plains (3) Exp. Return n-0.14 0.12 n-0.07 Std. Dev. O-0.08 o-0.05 oy-0.01 Weight in Portfolio w-1/3 wz-1/3 wy-1/3 Correlation Among Investment 1 and 2 (p2)-0.30 1 and 3 (pu) --0.40 2 and 3 (s) --0.10 Portfolio Data for Financial Servicing Analysis Under Risk a. Calculate the expected retum of the portfolio. b. Calculate the variance and the standard deviation of the portfolio. c. Calculate the variance and standard deviation of the portfolio assuming that the correlation among the investments is all equal to 0. d. Calculate the variance…
Below pay-off was generated for your investment options. From this pay-off table determine the best decision using decision making under uncertainty: a.Maximax b.Maximin c.Minimax Payoff Table Economy Growing Stable Declining Alternatives Bonds Stocks 40 45 70 30 -13 Mutual Funds 53 45 -5
The less correlated the securities in a portfolio, Select one: O a the higher the diversifiable risk. O b. the higher the portfolio risk. O c. the lower the portfolio risk. Od the lower the unsystematic risk.
2. A liberal arts college has an endowment that pays engineering students a scholarship if they earn over a certain GPA in their junior year. There are three types of junior engineering students in the college: 40% are in chemical engineering, 25% are in electrical engineering and 35% are in mechanical engineering. It is known that both junior electrical and mechanical engineering students are twice as likely to earn the scholarship as junior chemical engineering students. If a chemical engineering student earns the scholarship they receive $2000 and if an electrical or mechanical engineering student earns the scholarship they receive $1000. Given that a junior engineering student earns a scholarship, find the expected amount that is paid to the student. Give answer to the fourth decimal.
At the Acme Cement Company, employeescontribute to a welfare fund at the rate of 4% ofthe first $1000 earned, 3% of the next $1000,2% of the next $1000, and 1% of any additionalincome. What will Mr. Morris contribute in ayear in which he earns $20,000?
An insurance company offers four different deductible levels-none,low, medium, and high-for its homeowner's policyholders and threedifferent levels-low, medium, and high-for its automobilepolicyholders. The accompanying table gives proportions for the variouscategories of policyholders who have both types of insurance. Forexample, the proportion of individuals with both low homeowner'sdeductible and low auto deductible is .06 (6% of all such individuals). Homeowner's Auto N L M H LMH .04.07.02 .06.10.03 .05.20.15 .03.10.15 Suppose an individual having both types of policies is randomlyselected.a. What is the probability that the individual has a medium auto deductible and a high homeowner's deductible?b. What is the probability that the individual has a low autodeductible? A low homeowner's deductible?c. What is the probability that the individual is in the samecategory for both auto and homeowner's deductibles?d. Based on your answer in part (c), what is the probability…

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