pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the th sa money market fund that provides a safe return of 4%. The characteristics of the risky funds are as follows: Stock fund (S) Bond fund (B) Expected Return 24% 12 Standard Deviation 30% 19 The correlation between the fund returns is 0.13. You require that your portfolio yield an expected return of 12%, and that it be efficient, that is, on the steepest feasible CAL. Required: a. What is the standard deviation of your portfolio? . What is the proportion invested in the money market fund and each of the two risky funds? Complete this question by entering your answers in the tabs below.
Q: if the cash flow for project Z are C0= -1,000, C1= 600, C2= 720, C3= 2,000 calculate the discounted…
A: Discounted payback period is the period within which accumulated discounted cash flow becomes equal…
Q: Linda's salary is $49000 a year. As a part of it's incentive program the company decides to give her…
A: Salary For Year 1 = s1 = $49,000Growth Amount = g = $1000Discount Rate = r = 6.2%
Q: MedCorp's free cash flow to equity is P350 million and the firm's net debt increased by 20 million.…
A: The question focuses around the concept of Free Cash Flow to the Firm (FCFF) and the market value of…
Q: Blossom Hospitalinstalls a new parking lot. The paving cost $29200 and the lights to illuminate the…
A: A fixed asset is a type of long-term asset that is owned by a firm and used for its operations. For…
Q: Example 2.14: Calculating the present value of an annuity due at 12% An investor wants to buy an…
A: The objective of the question is to calculate the present value of an annuity due at 12% interest…
Q: d. Suppose the only owners of stock are corporations. Recall that corporations get at least a 50…
A: When a stock goes ex-dividend, its share price reduces by the dividend amount. So, the share price…
Q: You determine you can afford $300 per month for a car. What is the maximum amount you can afford to…
A: The concept of time value of money will be used here. As per the concept of time value of money the…
Q: The Metchosin Corporation has two different bonds currently outstanding. Bond M has a face value of…
A: A bond is an instrument that the issuing organization uses to access debt capital from…
Q: Ten years ago, you took out a $400,000 mortgage to buy a new house. The mortgage was a 20-\\nyear,…
A:
Q: K Assume that a bond will make payments every six months as shown on the following timeline (using…
A: Part a: The maturity of the bond is 10 years. Part b: The coupon rate is 4.07% (or approx.…
Q: On January 1, 2025, Haystack, Inc. leased equipment to Silver Point Company. The equipment had a…
A: Here,Fair Value of Equipment is $780,000Implict Rate of Leasing is 8%Lessee incremetal borrowing…
Q: The Metchosin Corporation has two different bonds currently outstanding. Bond M has a face value of…
A: Bonds are debt instruments issued by companies. The issuing company pays periodic coupons or…
Q: RBL’s directors are looking to expand into a new suite of services. Although they are doing quite…
A: RBL is considering issuing corporate bonds to finance its expansion into prefabricated home…
Q: A borrower takes out a 24-year adjustable rate mortgage loan for $253114 with monthly payments. The…
A: Using the annuity payment formula, the calculated new monthly payment for the third year, with a 5%…
Q: Problem 5-3 Compound Interest (LO1) Suppose that the value of an investment in the stock market has…
A: Interest rate5%Number of years between 1909 and 2020111Amount invested in 1909$1,000.00FV of…
Q: 5. Erin borrowed $200,000 fixed-rate 30-yr mortgage when mortgage rate was 4.5%. How much total…
A: Amortization refers to the systematic and regular repayment of loan and interest spread over the…
Q: You borrow $560,000 to purchase a home. The loan rate is 8.95% and must be repaid in 27 years. What…
A: Compound = Monthly = 12Present Value of Payment = pv = $560,000Interest Rate = r = 8.95 / 12%Time =…
Q: A proposed cost-saving device has an installed cost of $530,000. It is in Class 8 (CCA rate=20%) for…
A: Working capital refers to the difference between a company's current assets and current liabilities.…
Q: B eBook Problem 6-09 As chief investment officer of a small endowment fund, you are considering…
A: Asset classE(r)SDCSFIPRCurrent allocationProposed…
Q: son.3
A: The objective of the question is to determine the total amount of Canadian Investor Protection Fund…
Q: 7. What is the future value of a 10-year, $200 annual payment ordinary annuity. evaluated at an…
A: Futrue value refers to the concept used for evaluating the value of the current asset at some future…
Q: Kelly is a diligent mother who has just finished supporting her two children, Susan, aged 23, and…
A: (a) Annual Savings for Randy: Determine the duration: Randy will turn 30 in five years (30 - 25).…
Q: An annuity due pays $17,250 every year for the next 6 years and earns a 7.34% annual return. How…
A: Annuity Due = a = $17,250Time = t = 6Interest Rate = r = 7.34%Type Payment = due = at the beginning
Q: Question 8 Capital and asset types Tier1 capital Tier 2 capital Corporate debenture Mortgage loan…
A: The objective of the question is to calculate the risk-weighted assets, the Capital Adequacy Ratio…
Q: When Fund H started on 1/1/21, it had $318,225,000 in assets under management (AUM). The annual…
A: Starting fund value = $318,225,000Cash outflow = $120,204,000Cash inflow = $27,885,000HPR 1 =…
Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $303,000, has a…
A: EAC refers to Equivalent Annual Cost, annual cost incurred for operations or business. To calculate…
Q: Return on Sales The following financial data is from Brenner Instruments' financial statements…
A: Return on sales is a financial ratio. Financial ratios are based on the relationship between two…
Q: Assume there are no investment projects in the economy that yield an expected rate of return of 25…
A: Expected return vs investment:The anticipated yield, or expected return, stands as a pivotal metric…
Q: You manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 29%.…
A: The Sharpe ratio refers to the measure of the risk-adjusted return to ascertain the compensation…
Q: A $1,000 par value bond was issued 20 years ago at a 9 percent coupon rate. It currently has 5 years…
A: Given,Bond Par Value = $1000Coupon rate = 9%( semi annual = 9%/2= 4.5%)Remaining Period (n)= 5 Years…
Q: What is the coupon rate for the bond? Assume semi-annual payments. Answer as a percent! Bond Coupon…
A: Coupon rate refers to the payment that is made at every period charged on the bond amount which is…
Q: SOLVE IN EXCEL AND SHOW FORMULAS. 1. If the Annual Volatility of Stock YZ 27%, then what is XYZ 's…
A: The objective of the question is to calculate the daily and annual volatility of a stock, and to…
Q: Parkallen Inc. has identified the following two mutually exclusive projects: Year 0 1 2 3 4 Cash…
A: The Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of an…
Q: Beacon Company is considering automating its production facility. The initial investment in…
A: Net Present Value (NPV) is a financial metric used to determine the profitability of an investment.…
Q: use excel and explain step by step
A: The final answer is:The WACC for company XYZ is 11.04%.This means that the firm must earn at least…
Q: Show in excel format how to solve the following - Westland Manufacturing spends $20,000 to update…
A: Cost = $20,000Annual savings = $4,000Cost of funds = 8%Number of years = 10 years
Q: Before-tax cost of debt Gronseth Drywall Systems, Inc., is in discussions with investment bankers…
A: The before-tax cost of debt refers to the interest rate a company pays on its debt obligations…
Q: Each of the four independent situations below describes a finance lease in which annual lease…
A: A lease is defined as a contractual agreement incorporated between two business entities where one…
Q: You've collected the following information from your favorite financial website. Dividend PE Yield…
A: Current dividend (D0 ) = $0.88Current Stock Price = $15.51Growth rate = -13%
Q: There was a bit of concern about one of RBL's newer entities - RBL Paving Company. Management wants…
A: Return on equity (ROE): ROE measures the profitability of a company with respect to its…
Q: Massers Company is issuing long-term bonds to raise money for a planned acquisition. The face value…
A: Bond valuation is the process of determining the fair or intrinsic value of a bond, which represents…
Q: Problem 7-21 Compute Bond Price (LG7-4) Compute the price of a 5.8 percent coupon bond with 10 years…
A: Here,CouponRate is 5.8%Time to Maturity is 10 yearsYield to Maturity is 9.4%Frequency of Coupon…
Q: TT, Inc., has a bond outstanding with a coupon rate of 5.84 percent and quarterly payments. The…
A: Here,Par Value of Face Value of Bond is $1,000Coupon Rate is 5.84%Frequency of Coupon Payment in an…
Q: 4. Measuring standalone risk using realized data Returns earned over a given time period are called…
A: Standalone risk can also be regarded as the unsystematic risk which means the risk that is…
Q: Suppose that a firm's recent earnings per share and dividend per share are $3.10 and $2.10,…
A: Current EPS = $3.10 Current DPS = $2.10Growth rate = 7%Current P/E ratio = 30P/E ratio in 5 years =…
Q: Find the duration of a 5.0% coupon bond making semiannually coupon payments if it has three years…
A: Duration of bond shows the weighted period required to receive all cash flow from the bond and is…
Q: Consider 2 stocks in the following table. We create a stock index of companies that make stuff for…
A: Price weighted index:The Price Weighted Index is a financial metric that gauges the performance of…
Q: What is the market price of a bond with a maturity of 21 years, a coupon rate of 9.2% paid…
A: Price of the bond will be equal to the present value of the coupon payments and maturity value of…
Q: Which results in a lower total interest charge, borrowing $900900 to be repaid 12 months later as…
A: The objective of the question is to determine which loan type, a single-payment loan or a 12-month…
Q: an investment of $10.1010.10 million today and $5.105.10 million in one year. The government will…
A: Net present value(NPV) is the difference between present value of all cash inflows and PV of cash…
Step by step
Solved in 3 steps with 2 images
- A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 7%. The characteristics of the risky funds are as follows: Stock fund (S) Bond fund (B) The correlation between the fund returns is 0.10. You require that your portfolio yield an expected return of 16%, and that it be efficient, that is, on the steepest feasible CAL. a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places.) Standard deviation Expected Return Standard Deviation 198 31% 23 14 Money market fund Stocks Bonds 19.33 % b. What is the proportion invested in the money market fund and each of the two risky funds? (Round your answers to 2 decimal places.) Proportion InvestedA pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 4%. The characteristics of the risky funds are as follows: Expected Return Standard Deviation Stock fund (S) Bond fund (B) The correlation between the fund returns is 0.09. You require that your portfolio yield an expected return of 14%, and that it be efficient, that is, on the steepest feasible CAL. 17% 14 35% 18. Required: a. What is the standard deviation of your portfolio? b. What is the proportion invested in the money market fund and each of the two risky funds?A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 6%. The characteristics of the risky funds are as follows: Stock fund (S) Bond fund (B) Expected Return 21% 13 The correlation between the fund returns is 0.13. You require that your portfolio yield an expected return of 11%, and that it be efficient, that is, on the steepest feasible CAL. Required: a. What is the standard deviation of your portfolio? b. What is the proportion invested in the money market fund and each of the two risky funds? Required A Standard Deviation 36% 22 Complete this question by enter your answers in the tabs below. Required B Money market fund Stocks Bonds What is the proportion invested in the money market fund and each of the two risky funds? Note: Round your answers to 2 decimal places. Proportion Invested % % %
- A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long -term bond fund, and the third is a money market fund that provides a safe return of 4%. Thecharacteristics of the risky funds are as follows: The correlation between the fund returns is 0.13. Yourequire that your portfolio yield an expected return of 12%, and that it be efficient, that is, on the steepestfeasible CAL. a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places.)Standard deviation b. What is the proportion invested in the money market fund and each of the two riskyfunds? (Round your answers to 2 decimal places.)A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 6%. The characteristics of the risky funds are as follows: Stock fund (S) Bond fund (B) Expected Return 24% 14 The correlation between the fund returns is 0.14. Standard Deviation You require that your portfolio yield an expected return of 16%, and that it be efficient, that is, on the steepest feasible CAL. Required A Required: a. What is the standard deviation of your portfolio? b. What is the proportion invested in the money market fund and each of the two risky funds? 33% 22 Complete this question by entering your answers in the tabs below. Required B Money market fund Stocks Bonds What is the proportion invested in the money market fund and each of the two risky funds? Note: Round your ar vers to 2 decimal places. Proportion Invested % %A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 6%. The characteristics of the risky funds are as follows: Stock fund (S) Bond fund (B) Expected Return 24% 14 Standard Deviation 33% 22 The correlation between the fund returns is 0.14. You require that your portfolio yield an expected return of 16%, and that it be efficient, that is, on the steepest feasible CAL. Required: a. What is the standard deviation of your portfolio? b. What is the proportion invested in the money market fund and each of the two risky funds? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below.
- A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 4%. The characteristics of the risky funds are as follows: Stock fund (S) Bond fund (8) Standard deviation Expected Return Standard Deviation 19% 10 The correlation between the fund returns is 0.11. You require that your portfolio yield an expected return of 12%, and that it be efficient, that is, on the steepest feasible CAL. a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places.) Money market fund Stocks Bonds b. What is the proportion invested in the money market fund and each of the two risky funds? (Round your answers to 2 decimal places.) 34% 18 Proportion Invested % % %A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 5%. The characteristics of the risky funds are as follows: Stock fund (5) Bond fund (8) Standard deviation Expected Return 17% 13 The correlation between the fund returns is 0.12. You require that your portfolio yield an expected return of 12%, and that it be efficient, that is, on the steepest feasible CAL a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places.) Money market fund Stocks Bonds Standard Deviation 38% 18 b. What is the proportion invested in the money market fund and each of the two risky funds? (Round your answers to 2 decimal places.) Proportion InvestedA pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 4%. The characteristics of the risky funds are as follows: Expected Return Standard Deviation 234 14 294 17 Stock fund (5) Bond fund (8) The correlation between the fund returns is 0.12. You require that your portfolio yield an expected return of 12%, and that it be efficient, that is, on the steepest feasible CAL a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places) Standard deviation b. What is the proportion invested in the money market fund and each of the two risky funds? (Round your answers to 2 decimal places.) Money market fund Stocks Bonds Proportion Invested *** Check my work
- A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 6%. The probability distribution of the risky funds is as follows: E(r) st. dev. stock fund .24 .33 bond fund .14 .22 The correlation between the fund returns is 0.14. You require that your portfolio yield an expected return of 16%, and that it be efficient, on the best feasible CAL. a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places.) b. What is the proportion invested in the T-bill fund and each of the two risky funds? (Round your answers to 2 decimal places.)A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows: Stock fund (5) Bond fund (D) Expected Return 20% 12 The correlation between the fund returns is 0.10. You require that your portfolio yield an expected return of 14%, and that it be efficient, that is, on the steepest feasible CAL a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places.) T-bill fund Stocks Bonda Standard Deviation 30% 15 Standard deviation 13.92% b. What is the proportion invested in the money market fund and each of the two risky funds? (Round your answers to 2 decimal places.) Proportion InvestedA pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 7%. The characteristics of the risky funds are as follows: Expected Return Standard. Deviation Stock fund (S) 32% Bond fund (B) 19 The correlation between the fund returns is 0.11. Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. Note: Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places. 22% 12