s the graph?nd standardnd that it besky funds?return 14%,rd deviation-4+4+3+6+615%; 13.94%;10.21; 0.355;75; GA 14.13%W.ent serviceanagement.arn a goodissues-ArespectiveMarket0.3050%-0%FIN 633: Investment Management 103You believe that the addition of other assets classes to the endowment portfolio wouldimprove the portfolio by reducing risk and enhancing return. You are aware that depressedconditions in real estate market are providing opportunities for property acquisition at levelsinvestment in real estate would be both appropriate and timely, and have decided toof expected return that are unusually high by historical standards. You believe that anrecommend a 20 percent position be established with funds taken equally from stocks andbonds (10 percent from stock and 10 percent from bonds).Preliminary discussions revealed that several trustees believe real estate is too risky toinclude in the portfolio. The board chairman, however, has scheduled a special meeting forfurther discussion of the matter and has asked to provide background information that willTo assist you, the following expectation data have been developed:clarify the risk issue.Correlation MatrixBonds Real EstateAsset ClassStockBondReal EstateT-BillsReturn16%14%18%8%SD12%6%14%0.0Stock1.00-0.10-0.4001.00-0.2001.00T-Bills1.00Required:a. Calculate portfolio return and standard deviation of current portfolio (i.e. 60 percent instock and 40 percent in bonds.b. If you are asked to create minimum variance portfolio using stock and bond, whatshould be the proportion of investment in stock and bond? Calculate portfolio returnand portfolio risk using the calculated weight. Compare the risk the portfolio with therisk of the portfolio created in part 'a'.C. Calculate portfolio risk and return that would result from the addition of real estate. Doyou observe benefit of diversification?Ans: (a) E(Rp) = 15.2%; p = 7.36% (b) ws = 0.2222; We = 0.7778; E(Rp) = 14.44%; p = 5.14%(c) E(Rp) = 15.80%; p = 5.43%Makeup) 0 No 1 Carefully read the following situation and data, and answer the questions thatfollow:You have recently been appointed as chief investment officer of a major charitablefoundation. Its large endowment fund is currently invested in a broadly diversified portfolioof stocks (60 percent) and bond (40 percent). The foundation's board of trustees is a groupof prominent individuals whose knowledge of modern investment theory and practice issuperficial. You decide a discussion of basic investment principles would be helpful.

In this question , a chief investment officer of major charitable foundation, who have currently…

Carefully read the following situation and data, and answer the questions that follow: You have recently been appointed as chief investment officer of a major charitable foundation. Its large endowment fund is currently invested in a broadly diversified portfolio of stocks (60 percent) and bond (40 percent). The foundation's board of trustees is a group of prominent individuals whose knowledge of modern investment theory and practice i superficial. You decide a discussion of basic investment principles would be helpful.

Carefully read the following situation and data, and answer the questions that follow: You have recently been appointed as chief investment officer of a major charitable foundation. Its large endowment fund is currently invested in a broadly diversified portfolio of stocks (60 percent) and bond (40 percent). The foundation's board of trustees is a group of prominent individuals whose knowledge of modern investment theory and practice i superficial. You decide a discussion of basic investment principles would be helpful.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter20: Income Taxation Of Trusts And Estates

Section: Chapter Questions

Problem 1DQ

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please give answer for 4,5, and 6