Investing: Inverse ETFS (Exchange Traded Funds) Inverse ETFS, sometimes referred to as "bear market" or "short" funds, are designed to deliver the opposite of the performance of the index or catego they track, and so can be used by traders to bet against the stock market. The following table shows the performance of three such funds as of August 5, 2015.t Year-to-Date Loss (%) MYY (ProShares Short Midcap 400) 6 SH (ProShares Short S&P 500) 5 REW (ProShares UltraShort Technology) You invested a total of $12,000 in the three funds at the beginning of 2011, including an equal amount in SH and REW. Your year-to-date loss from the first two funds amounted to $510. How much did you invest in each of the three funds? MYY SH REW

Investing: Inverse ETFS (Exchange Traded Funds) Inverse ETFS, sometimes referred to as "bear market" or "short" funds, are designed to deliver the opposite of the performance of the index or catego they track, and so can be used by traders to bet against the stock market. The following table shows the performance of three such funds as of August 5, 2015.t Year-to-Date Loss (%) MYY (ProShares Short Midcap 400) 6 SH (ProShares Short S&P 500) 5 REW (ProShares UltraShort Technology) You invested a total of $12,000 in the three funds at the beginning of 2011, including an equal amount in SH and REW. Your year-to-date loss from the first two funds amounted to $510. How much did you invest in each of the three funds? MYY SH REW

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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Consider the following trading and performance data for four different equity mutual funds: Fund W Fund X Fund Y Fund Z Assets Under Management, $ 289.40 $ 653.70 $ 1,298.40 $ 5,567.30 Avg. for Past 12 Months (mil) Security Sales, Past 12 Months (mil) $ 37.20 $ 569.30 $ 1,453.80 $ 437.10 Expense Ratio 0.33% 0.71% 1.13% 0.21% Pretax Return, 3-Year Avg. 9.98% 10.65% 10.12% 9.83% Tax-Adjusted Return, 3-Year Avg. 9.43% 8.87% 9.34% 9.54% a. Calculate the portfolio turnover ratio for each fund. b. Which two funds are most likely to be actively managed and which two are most likely passive funds? Explain. c. Calculate the tax cost ratio for each fund. d. Which funds were the most and least tax efficient in the operations? Why?
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .96. Year Fund 2015 -14.92% Market -28.50% Risk-Free 2% 2016 25.10 19.90 2017 12.80 10.60 2018 7.00 2019 -1.44 7.60 -2.20 4252 Calculate Jensen's alpha for the fund, as well as its information ratio. (Do not round intermediate calculations. Enter the alpha as a percent rounded to 2 decimal places. Round the ratio to 4 decimal places.) Jensen's alpha Information ratio %
Calculate the net asset value (NAV) for a mutual fund with the following values: The NAV of the mutual fund is $ Data table per share. (Round to the nearest cent.) (Click on the following icon in order to copy its contents into a spreadsheet.) Market value of securities held in the portfolio = $4.3 billion Liabilities of the fund = $168 million = 318 million Shares outstanding X
13. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) REQUIRED RATE OF RETURN (Percent) 20.0 16.0 20 12.0 16 8.0 12 4.0 0 0 CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stock's betal Required rate of return on Happy Corp. stock 0 Happy Corp.'s new required rate of return is F 0.6, 7.6 HC's Stock ☐ 0.5 An analyst believes that inflation is going to increase by 2.0% over the next year, while the market risk premium will be unchanged. The analyst uses the Capital Asset Pricing Model (CAPM). The following graph plots the current SML. Calculate Happy Corp.'s new required return. Then, on the graph, use the green points (rectangle symbols) to plot the new SML suggested by this analyst's prediction. 0 1.0 RISK (Beta) Tool tip: Mouse over the…
In the chapter opener, you learned that Bill Miller's investment performance was alternating between the very top and the very bottom of his profession. What aspect of his investment strategy would lead you to expect that his performance might exhibit greater volatility than that of other mutual funds? The following table shows the annual performance from 2009 to 2012 of Miller's Opportunity fund and the S&P 500 index. Opportunity Year 2009 2010 2011 2012 S&P 500 Fund Return 76.0% 16.6% -34.9% 39.6% Return 26.5% 15.1% 2.11% 16.0% Calculate the average annual return of the Opportunity fund and the S&P 500. Which performed better over this period? If you had invested $1,000 in each in- vestment at the beginning of 2009, how much money would you have in each investment at the end of 2012? Calculate the standard deviation of the Opportu- nity fund's return and those of the S&P 500. Which is more volatile?
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.97. 1ITT Market Risk-Free Year Fund 2011 -21.8% -41.5% 3% 2012 25.1 21.2 4 14.1 2013 14.5 8.8 2014 6.4 4 -2.22 2015 -5.2 What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Sharpe ratio Treynor ratio
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.97. Year 2011 2012 2013 2014 2015 Fund -15.2% 25.1 12.4 6.2 -1.2 Sharpe ratio Market -24.5% 19.5 9.4 7.6 -2.2 What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Treynor ratio X Answer is complete but not entirely correct. Risk-Free 1% 3 2 4 2 0.2273 x 3.4773 X
The Emerging Growth and Equity Fund is a "low-load" fund. The current offer price quotation for this mutual fund is $21.72, and the front-end load is 1.95 percent. a. What is the NAV? (Round your answer to 2 decimal places.) Net asset value dived b. If there are 18.7 million shares outstanding, what is the current market value of assets owned by the fund? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Market value of assets
Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $50. The stock will pay a dividend at year-end of $2. Assume that risk-free Treasury securities currently offer an interest rate of 2%. Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2017 (figures in percent per year) are as follows. Average Premium (Extra return veraus Treasury bills) () Average Annual Rate of Return Portfolio Treasury billa Treasury bonda Common atocks (%) 3.8 5.3 11.5 1.5 7.7 a. What is the discount rate on the stock? (Enter your answer as a percent rounded to 2 decimal places.) Discount rate % Prev 1 of 5 Next > search
If you place an order to buy or sell a share of an open-ended mutual fund during the trading day, the order will be executed at ____________. A. the NAV at the time you place the order B. the NAV calculated at the opening of the next day's trading C. the NAV delayed 15 minutes D. the NAV calculated at the market close on the day E. the market price at the time you place the order
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year 2015 2016 2017 2018 2019 Fund -17.0% Sharpe ratio Treynor ratio 25.1 13.3 6.4 -1.74 Market -33.5% 20.4 12.1 8.0 -3.2 Risk-Free 2% 6 2 5 3 What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.)
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