You are a provider of portfolio insurance and are establishing a four-year program. The portfollo you manage is currently worth $60 million, and you promise to provide a minimum return of 0%. The equity portfolio has a standard deviation of 25% per year, and T-bills pay 5.2% per year. Assume that the portfolio pays no dividends. Required: a-1. How much of the portfolio should be sold and placed in bills? (Input the value as a positive value. Do not round intermediate calculations and round your final percentage answer to 2 decimal places.) Portfolio in bills a-2. How much of the portfolio should be sold and placed in equity? (Input the value as a positive value. Do not round intermediate calculations and round your final percentage answer to 2 decimal places.) Portfolio in equity

You are a provider of portfolio insurance and are establishing a four-year program. The portfollo you manage is currently worth $60 million, and you promise to provide a minimum return of 0%. The equity portfolio has a standard deviation of 25% per year, and T-bills pay 5.2% per year. Assume that the portfolio pays no dividends. Required: a-1. How much of the portfolio should be sold and placed in bills? (Input the value as a positive value. Do not round intermediate calculations and round your final percentage answer to 2 decimal places.) Portfolio in bills a-2. How much of the portfolio should be sold and placed in equity? (Input the value as a positive value. Do not round intermediate calculations and round your final percentage answer to 2 decimal places.) Portfolio in equity

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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Your friend told you about an NFT (Non-fungible Token) that they think will be worth $842 in 7 years. If your required return on investments of this risk is 13.2%, what is the most you should be willing to pay for it today? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate. Answer:
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $75,000with a probability of 25%, $125,000 with a probability of 50%, or $140,000 with a probability of 25%.The alternative risk-free investment in T-bills pays 4% per year. a) If you require a risk premium of 8%, how much will you be willing to pay for the portfolio?b) What is the Sharpe ratio of the portfolio if you can purchase it at the price calculated above?
Please help me
Your friend told you about an NFT (Non-fungible Token) that they think will be worth $996 in 6 years. If your required return on investments of this risk is 16.5%, what is the most you should be willing to pay for it today? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate.
Assume you can buy a bond that has a par value of $1000, matures in 10 years, yielding 6% and has a duration of 5. If you would like to use this bond to form a guaranteed investment contract “GIC” and offer a guaranteed rate of return to investors for certain years. a. what is the maximum yield you can offer? Why? Explain. b. For how many years would you make the guarantee? Explain.
You are considering investing in a security that will pay you RM1,000 in 'n' years. Required: How long do you have to invest if you start the investment of RM250 today with the appropriate discount rate of 10 percent quarterly? i. ii. Assume these securities sell for RM365, in return for which you receive RM1,000 in 30 years. What is the rate of return investors earn on this security if they buy it for RM365?
The risk-free rate is 8% per annum with continuous compounding. The price of stock CPU is $30. CPU currently does not pay a dividend. You use a two-step tree to price a European put on CPU with a strike price of $32. The option expires in six months. If you estimate that u=1.1 and d=0.9, what is the price of your put? A.$1.50 B.$2.24 C.$1.88 D.$2.56
1. PIMCO Equity Fund has a 3% load. Annual fees are 0.35%, and the expected average annual return for the next 7 years is 11% annually Vanguard Equity Fund is a no-load fund. Its expected average return for the next 7 years is 10% with annual fees of 1.1%. a. If you hold both investments for 2 years, which one is the better investment? b. You believe PIMCO is a better long-term investment. How long must you hold the PIMCO Fund to achieve higher average annual returns than an investment in Vanguard?
Suppose the term structure of risk-free interest rates is as shown here: a. Calculate the present value of an investment that pays $1,000 in 2 years and $4,000 in 5 years for certain. b. Calculate the present value of receiving $900 per year, with certainty, at the end of the next 5 years. To find the rates for the missing years in the table, linearly interpolate between the years for which you do know the rates. (For example, the rate in year 4 would be the average rate in year 3 and year 5.) c. Calculate the present value of receiving $2,700 per year, with certainty, for the next 20 years. Infer rates for the missing years using linear interpolation. (Hint: Use a spreadsheet.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) 2 years 3 years 5 years 7 years 1 year 2.06 2.44 2.64 3.22 3.74 Term Rate (EAR, %) Print Done 10 years 4.25 20 years 5.09 I X t cent.)
Please give me answer fast. I will rate for sure.
1. You are selected as an analysis to manage a fixed income portfolio for a client in particular a corporate bond. You are considering a 3-year floating rate note with 1 year benchmark rate of 2.88%. It is priced at 685 of 1000 par value. Your analysis tells you probability of default is approximately 40%. If the issue survives over the next three years due to the industry it is in. The probability of default for each year is 9% and a volatility of 12%. What is the price of the bond?
State the return rate (in %) for your optimal portfolio.

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