The market value of an investor s portfolio is currently $450,000. The investor requires that the portfolio be worth at least $500,000 in three years' time. Which of the following securities should the investor purchase? O a) A short-term bond mutual fund that has a 3-year compound annual return of 4%. O b) A 3-year CDIC-guaranteed GIC with an interest rate of 3% compounded annually. Oc) A 3-year Government of Canada zero couon bond trading at a price of 90. O d) A money market mutual fund with a current yield of 4%.
The market value of an investor s portfolio is currently $450,000. The investor requires that the portfolio be worth at least $500,000 in three years' time. Which of the following securities should the investor purchase? O a) A short-term bond mutual fund that has a 3-year compound annual return of 4%. O b) A 3-year CDIC-guaranteed GIC with an interest rate of 3% compounded annually. Oc) A 3-year Government of Canada zero couon bond trading at a price of 90. O d) A money market mutual fund with a current yield of 4%.
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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Transcribed Image Text:The market value of an investor s portfolio is currently $450,000. The investor
requires that the portfolio be worth at least $500,000 in three years' time. Which of
the following securities should the investor purchase?
O a) A short-term bond mutual fund that has a 3-year compound annual return of
4%.
b)
A 3-year CDIC-guaranteed GIC with an interest rate of 3% compounded
annually.
OC) A 3-year Government of Canada zero couon bond trading at a price of 90.
d) A money market mutual fund with a current yield of 4%.
What is the main disadvantage of single-manager managed accounts?
O a) They incur very high and frequent trading costs.
Ob) They lack of regulatory oversight.
Oc) They have a small range of available securities to choose from.
O d) There is no independent evaluation of the portfolio performance and risk.
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