person plans to invest a total of $140,000 in a money market account, a bond fund, an international stock fund, ants 60% of her investment to be conservative (money market and bonds). She wants the amount in domestic stocks to be 4 times the amount in ternational stocks. Finally, she needs an annual return of $5,600. Assuming she gets annual returns of 2.5% on the money market account, 3.5% the bond fund, 4% on the international stock fund, and 6% on the domestic stock fund, how much should she put in each investment? The amount that should be invested in the money market account is S Type a whole number.) The amount that should be invested in the bond fund is $ (Type a whole number.) The amount that should be invested in the international stock fund is $ (Type a whole number.) The amount that should be invested in domestic stock fund is $ (Type a whole number.)

An investor has $80,000 to invest in a CD and a mutual fund. The CD yields 8% and the mutual fund yields 7%. The mutual fund requires a minimum investment of $9,000, and the investor requires that at least twice as much should be invested in CDs as in the mutual fund. How much should be invested in CDs and how much in the mutual fund to maximize the return? What is the maximum return? To maximize income, the investor should place $ in CDs and $ in the mutual fund. (Round to the nearest dollar as needed.)

As a junior investment manager, your boss instructs you to help a client to invest $100,000for the next year. Particularly, you are asked to form an investment portfolio for the clientby investing in risk-free assets like 90-day bank bill and two stocks: A and B. Stock A hasa beta value of 0.8, an expected return of 7% and a standard deviation of 10%; and stockB has a beta value of 1.2, an expected return of 12% and a standard deviation of 15%.The correlation coefficient between the returns for the two stocks is 0. The risk-free rate is2%.(a) What is the expected return of the risky portfolio with the two stocks that has theleast amount of risk?(b) Suppose that the optimal risky portfolio with the two stocks has a weight of 53% inA and 47% in B, and has the expected return of 9.4% and standard deviation of8.8%. If this client is willing to take a risk measured by standard deviation of 5% forhis overall investment portfolio, how much would you recommend to the client toinvest in the…

(Related to Checkpoint 8.1) (Computing the portfolio expected rate of return) Penny Francis inherited a $200,000 portfolio of investments from her grandparents when she turmed 21 years of age. The portfolio is comprised of Treasury bills and stock in Ford (F) and Harley Davidson (HOG) a. Based on the current portfolo composition and the expected rates of return, what is the expected rate of retum for Penny's portfolio? b. If Penny wants to increase her expected portfolio rate of retur, she can increase the alocated weight of the portfolio she has invested in stock (Ford and Harley Davidson) and decrease her holdings of Treasury bills if Penny moves all her money out of Treasury bills and spits it evenly between the two stocks, what will be her expected rate of return? c. If Penny does move money out of Treasury bills and into the two stocks, she will reap a higher expected portfolio return, so why would anyone want to hold Treasury bills in their portfolio? a. Based on the current…

An investor has $633,000 to invest in bonds. Bond A yields an average of 8% and the bond B yields 5%. The investor requires that at least 3 times as much money be invested in bond A as in bond B. You must invest in these bonds to maximize his return. This can be set up as a linear programming problem. Introduce the decision variables: ?=dollars invested in bond A ?=dollars invested in bond B Compute ?+? $ ________. Round to the nearest cent.

Your bank account pays an interest rate of 8 percent. You are considering buying a share of stock in XYZ Corporation for $110. After 1, 2, and 3 years, it will pay a dividend of $5. You expect to sell the stock after 3 years for $120. Is XYZ a good investment? Support your answer with calculations

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A Client with a wealth of £100 000 wants her wealth managed by allocating 60% in Bonds and 40% in Equities. The manger allocates the client’s wealth accordingly, but actively manages the Equity fund. The Bonds fund performs in line with the benchmark which grows by 4.5%. The Equity fund grows to a value £42 300. The FTSE 100 Index increases from 6750 to 7255. Find the growth rates of the Equity benchmark and the managed Equity fund. Then, explain how successful was the manager’s decision to actively manage the equity fund.

After graduating from Baruch, Amal plans on investing $8,000 every year beginning age 25 to           age 65 (40 years).  She plans on buying a Total US Stock Market Index fund and expects it will earn a “gross” 10% a year – in line with the historic return from US stocks. How much would her portfolio be worth at age 65 if her expense ratios was 0.05% Ans:

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