Solve the question by showing work. Question 1 The manager is considering the purchase of government bonds in either country A, B, or C. The manager notices that for country A, it has a foreign exchanges/short term debt ratio of 150% and a debt to GDP ratio of 40%. For country B, foreign exchange/short term debt ratio is 79% and debt to GDP ratio is 87%. For country C, its economy is dominated by fishing industry and has a GDP in the most recent year of $80 billion. Which country’s government bonds do you want to purchase? Country A Country B Country C 1/3 into country A and the rest into country B Question 2 The manager has noticed that the yield curve is upward sloping in this country. The current portfolio in this country is 60% in stocks and 40% in bonds. Suggest changes to the portfolio based on this information. Shift money from stock to bond. Shift money from bond to stock. Sell all stock and bonds and only keep cash. Borrow more money and short stocks.
Solve the question by showing work.
Question 1
The manager is considering the purchase of government bonds in either country A, B, or C. The manager notices that for country A, it has a foreign exchanges/short term debt ratio of 150% and a debt to GDP ratio of 40%. For country B, foreign exchange/short term debt ratio is 79% and debt to GDP ratio is 87%. For country C, its economy is dominated by fishing industry and has a GDP in the most recent year of $80 billion. Which country’s government bonds do you want to purchase?
Country A
Country B
Country C
1/3 into country A and the rest into country B
Question 2
The manager has noticed that the yield curve is upward sloping in this country. The current portfolio in this country is 60% in stocks and 40% in bonds. Suggest changes to the portfolio based on this information.
Shift money from stock to bond.
Shift money from bond to stock.
Sell all stock and bonds and only keep cash.
Borrow more money and short stocks.
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