a. You expect a tax-free municipal bond portfolio to provide a rate of return of 4.5%. Management fees of the fund are 0.65%. What fraction of portfolio income is given up to fees? (Round your answer to 1 decimal place.) Bond fund b. If the management fees for an equity fund also are 0.65%, but you expect a portfolio return of 17.0%, what fraction of portfolio income is given up to fees? (Round your answer to 1 decimal place.) Equity fund % O Bond fund O Equity fund % c. For which fund might management fees be a bigger factor in your investment decision?

a. You expect a tax-free municipal bond portfolio to provide a rate of return of 4.5%. Management fees of the fund are 0.65%. What fraction of portfolio income is given up to fees? (Round your answer to 1 decimal place.) Bond fund b. If the management fees for an equity fund also are 0.65%, but you expect a portfolio return of 17.0%, what fraction of portfolio income is given up to fees? (Round your answer to 1 decimal place.) Equity fund % O Bond fund O Equity fund % c. For which fund might management fees be a bigger factor in your investment decision?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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In the following exercise, separate the investments according to the type of Keynesian demand they are: Transactions (0% to 5%), Precautionary (6% to 9%), and Speculative demand (greater than 10%). Investment in each category has the same risk. So you want to invest in the highest return for the same risk. Take each demand type and choose the highest return and put that amount into the investment. For example, if Bond fund A has a return of 4% and Fund B has a return of 5%, they have the same risk, so you would put $70 into bond fund B. You have the following investments Opportunities ad returns. Fidelity Bonds 11% Fidelity Magellan 9% Putman Bonds one 4% Putman bonds Two 12% Growth Stock One 15% Growth and Income 8% Income Fund 3% Putman Growth…
If a mutual fund's net asset value is $23.30 and the fund sells its shares for $25.00, what is the load fee as a percentage of the net asset value? Round your answer to two decimal places.....%
A university endowment fund has sought your advice on its fixed-income portfolio strategy. The characteristics of the portfolio's current holdings are listed below: Credit Maturity Coupon Modified Bond Rating (yrs.) Rate (%) Duration Convexity U.S. Govt. 3 2.724 9.9 A1 10 6.204 56.2 Aa2 5 3.704 18.7 Agency 7 4.798 32.1 Aa3 12 11.029 128.9 A B C D E Market Value of Position $34,000 34,000 34,000 34,000 34,000 $170,000 a. Calculate the modified duration for this portfolio (i.e., Mod Dp). Do not round intermediate calculations. Round your answer to three decimal places. years 0 10 12 11 0 b. Suppose you learn that the implied sensitivity (i.e., modified duration) of the endowment's liabilities is about 6.70 years. Identify whether the bond portfolio is: (1) immunized against interest rate risk, (2) exposed to net price risk, or (3) exposed to net reinvestment risk. The portfolio's duration is -Select- the liability's duration, portfolio is -Select-
Question 12?
You purchase a mutual fund for $17.23 The fund's NAV is $17.00 (the load fee was .23 cents). The NAV subsequently rises to $22.00, and you redeem the shares. What is the percentage return on your investment
You are considering purchasing a no - load mutual fund with an operating expense of .4% and a 12 b-1 expense of .25% . You are also considering purchasing a CD paying 3.0% per year. What minimum annual rate of return must the fund earn to make you better off in the fund versus the CD Group of answer choices 3.65 % 3.0 % 2.35% 3.4%
A risky fund has an expected return of 10% and a standard deviation of 18%. the T-Bill Rate is 5%. An Investor allocates 110% of her retirement portfolio to the risky fund and -10% to T-Bills (recall the negative allocations to T-ills indicates borrowing at the risk free rate) What is the investor's risk aversion coefficient? (PLEASE SHOW WORK!!) A) 2.06 B) -0.71 C) 3.7 D) 1.40
1. Suppose there is a mutual fund and each consumer buys | a share in it for her endowment at t = 0. The mutual fund maximises the wealth of its shareholders when choosing IF, the investment in the long term technology. At t =1, the mutual fund pays dividend d to each of its shareholders. At t = 1, the shares can be traded at price p*. a. Set up the mutual fund's optimisation problem and derive and interpret the first order condition. What happens when R increases and why? b. What is the optimal consumption profile cf , c and the optimal investment IF? | c. Calculate (i.e. derive an expression for) d and p. 2. Now suppose there is no financial intermediary to handle liquidity shocks. However, at t = 1 a market for bonds opens up and agents can trade their wealth at t = 1 for | wealth at t 2. Each bond pays 1 at t = 2 and its price is pM. Calculate the consumer's optimal investment decision IM at t = 0 , the price of the bond pM, and the optimal consumption in the two states cM, cM. 3.…
20)Corporate fund started the year with a net asset value of GHS12.25. By year-end, its NAV equaled GHS12.10. The fund paid year-end distributions of income and capital gains of GHS1.50. What was the (pretax) rate of return to an investor in the fund?
Jk. 203.
If a mutual fund's net asset value is $23.60 and the fund sells its shares for $25.30, what is the load fee as a percentage of the net asset value?
Assuming risk free rate to be 2% p.a while market return is expected to be 8% return with a Standard Deviation of 10%, answer the following question using Markowitz Model of lending and borrowing at risk free rate Questions : a) River Park fund aims to earn a 12% Return on their Portfolio comprising of equities tracking the Dow Jones and Risk free Securities. To achieve this goal, how much risk will they have to assume? Show the risk return combination for the fund with the weights

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