ABC has a substantial number of clients who wish to own a mutual fundportfolio that closely matches the performance of the S&P 500 stock index.A manager at ABC has selected five mutual funds (shown in the tablebelow) that will be considered for inclusion in the portfolio. The managermust decide what percentage of the portfolio should be invested in eachmutual fund. Based on the given information, please create yourspreadsheet model and find the optimal portfolio. Please submit yourbusiness model and solution.Table: Five Mutual Funds and Annual ReturnsMutual FundYear 1Year 2Year 3Year 4International Stock$15.64$17.62$5.80$3.13Large-Cap Blend$15.31$18.77-$5.06$1.75Mid-Cap Blend$18.74$18.43$6.28-$1.04Small-Cap Blend$14.19$12.37$1.92$7.32Intermediate Bond$7.88$9.45-$1.56$3.31S&P 500$13.00$12.00$7.00$1.50

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Answered: ABC has a substantial number of clients…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 5FPE

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Using Yahoo Finance, find two different mutual funds (such as a growth fund, a growth and income fund, a sector fund, or a bond fund). Compare the funds based on their size, management, risk level, and dividend distributions. Then, determine which of the two funds would be more appropriate.
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Frank Meyers, CFA, is a fixed-income portfolio manager for a large pension fund. A member of the Investiment Committee, Fred Spice, is very interested in learning about the management of fixed-income portfolios. Spice has approached Meyers with several questions. Specifically, Spice would like to know how fixed-income managers position portfolios to capitalize on their expectations of future interest rates. Meyers decides to illustrate fixed-income trading strategies to Spice using a fixed-rate bond and note. Both bonds have samiannual coupon periods. Unless otherwise stated, all interest rate (yield curve) changes are parallel. The characteristic of these securities are shown in the following table. He also considers a nine-year floating-rate bond (floater) that pays a floating rate semiannually and is currently yielding 5%. Fixed-rate bond: price 107.18, YTM 5%, TMT (years) 18, modified duration (years) 6.9848. Fixed-rate note: price 100, YTM 5%, TMT (years) 8, modified duration…
Primo Management Company is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how to choose the best benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of benchmarking. For the sake of discussion, Jones put together some comparative two-year performance numbers that relate to Primo’s current domestic funds under management and a potential benchmark. Style Category Weight Return Primo Benchmark Primo Benchmark Large-cap growth 0.60 0.50 17% 16% Mid-cap growth 0.15 0.40 24 26 Small-cap growth 0.25 0.10 20 18 As part of her analysis, Jones also takes a look at one of Primo’s global funds. In this particular portfolio, Primo is invested…
Primo Management Company is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how to choose the best benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of benchmarking. For the sake of discussion, Jones put together some comparative two-year performance numbers that relate to Primo’s current domestic funds under management and a potential benchmark. Style Category Weight Return Primo Benchmark Primo Benchmark Large-cap growth 0.60 0.50 17% 16% Mid-cap growth 0.15 0.40 24 26 Small-cap growth 0.25 0.10 20 18 As part of her analysis, Jones also takes a look at one of Primo’s global funds. In this particular portfolio, Primo is invested…
Primo Management Company is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how to choose the best benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of benchmarking. For the sake of discussion, Jones put together some comparative two-year performance numbers that relate to Primo’s current domestic funds under management and a potential benchmark. Style Category Weight Return Primo Benchmark Primo Benchmark Large-cap growth 0.60 0.50 17% 16% Mid-cap growth 0.15 0.40 24 26 Small-cap growth 0.25 0.10 20 18 As part of her analysis, Jones also takes a look at one of Primo’s global funds. In this particular portfolio, Primo is invested…
Suppose that a mutual fund agent approaches you and promote a fund which allows you to withdraw money from your Employment Provident Fund (EPF) to invest. From the analysis of the agent, the fund expected to pay up to 11% return, and you know that EPF paid an average 6% return and treasury’s return fixed at 2.75%. Based on the discussion in this chapter and in your opinion, are you going to take the investment? Justify your answer
Primo Management Co. is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how to choose the best benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of benchmarking. For the sake of discussion, Jones put together some comparative 2-year performance numbers that relate to Primo's current domestic funds under management and a potential benchmark. Style Category weight of Primo Large-cap growth Mid-cap growth 0.15 Small-cap growth 0.60 0.25 weight of Benchmark 0.50 0.40 0.10 return of Primo return of Benchmark (%) (%) 17 23 19 14 26 17 Calculate the contribution to performance of the pure sector allocation. Round your answer to two decimal place. Do not…
Select the term associated with mutual funds, ETFs and real estate that corresponds to each of the given descriptions. (Note: These are not necessarily complete definitions, but there is only one possible answer for each description.) Description This refers to a risk management technique where investors collect their money in a fund and then invest the fund into a diversified set of securities This plan is offered by most open-ended funds and allows intors to automatically receive a certain amount of money periodically This is an investment company that allocates investor funds into both income generating property and mortgage loans This is a specific type of real estate investment trust that owns and operates income-producing real This fund limits its investments to short-term, tax-exempt municipal securities Term
You currently own shares in Berkshire Mutual Fund (BMF). Your broker calls and recommends buying shares in a small-capitalization fund managed by Wonderland Investment Group (WIG). Yourbroker says that this fund will provide significant diversification benefits for your existing holdings. She gives you the following statistics based on the performance of the two funds over the last year. Please don,t copy wrong answer.Write correct answer.Answer must be correct. and do all calculation. its carry huge .Answer follow image. Must show all calculation.
As the chief investment officer for a money management firm specializing in taxable individual investors, you are trying to establish a strategic asset allocation for two different clients. You have established that Ms. A has a risk-tolerance factor of 8, while Mr. B has a risk-tolerance factor of 27. The characteristics for four model portfolios follow: ASSET MIX Bond 93% 75 32 13 Portfolio 1 2 3 4 Stock 7% 25 GB 87 a. Calculate the expected utility of each prospective portfolio for each of the two clients. Do not round intermediate calculations. Round your answers to two decimal places. 1 2 3 Portfolio Ms. A ER 8% 9 10 11 b. Which portfolio represents the optimal strategic allocation for Ms. A? Which portfolio is optimal for Mr. B? Portfollo-Select-represents the optimal strategic allocation for Ms. A. Portfolio Select is the optimal allocation for Mr. B. c. For Ms. A, what level of risk tolerance would leave her indifferent between having Portfolio 1 or Portfolio 2 as her strategic…

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