Nikulbhai You are evaluating a closed-end mutual fund and see that its price is different from its net asset value (NAV). The fund has an expenseratio (ε) of 2.80% and a dividend yield (O) of 4.00%. The fund has experienced a risk-adjusted abnormal return (a) of 3.40%.By what amount (premium or discount) is the fund likely to trade relative to its NAV?Note: Use a minus sign if the amount is a discount. Round your answer to 2 decimal places.Amount0.99 %

To estimate whether a closed-end fund is trading at a premium or discount to its net asset value…

Answered: You are evaluating a closed-end mutual…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 2FPE

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It measures how much rate of return the fund manager/fund generates per unit of systematic risk (beta)? a.PSE b.Jensen Index c.Treynor Index d. Sharpe Index
Assume the correlation coefficient between Baker Fund and the market index is .70. What percentage of Baker Fund’s total risk is specific (i.e., nonsystematic)?
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Bhuptbhai
The returns on the Bledsoe Small-Cap Fund are the most volatile of all the mutual funds offered in the 401(k) plan. Why would you ever want to invest in this fund? When you examine the expenses of the mutual funds, you will notice that this fund also has the highest expenses. Does this affect your decision to invest in this fund? A measure of risk-adjusted performance that is often used is the Sharpe ratio. The Sharpe ratio is calculated as the risk premium of an asset divided by its standard deviation. The standard deviation and return of the funds over the past 10 years are listed below. Calculate the Sharpe ratio for each of these funds. Assume that the expected return and standard deviation of the company stock will be 15 percent and 65 percent, respectively. Calculate the Sharpe ratio for the company stock. How appropriate is the Sharpe ratio for these assets? When would you use the Sharpe ratio? Assume the risk-free rate was 2.76 percent. 10-YEAR ANNUAL RETURN…
Vijay
The market risk premium is defined as __________. A. the difference between the return on an index fund and the return on Treasury bills B. the difference between the return on a small firm mutual fund and the return on the Standard and Poor's 500 index C. the difference between the return on the risky asset with the lowest returns and there turn on Treasury bills D. the difference between the return on the highest yielding asset and the lowest yielding asset
Suppose that you are a fixed-income portfolio manager running a fully active managed fund. Which of the following statements are true? O The duration of your portfolio matches that of a bond benchmark or index. O The aggregate credit risk of your portfolio matches that of a bond benchmark or index. Your portfolio matches the duration of a bond benchmark or index, although other factors (such as sectors, quality, callability, etc.) may diverge. The aggregate interest-rate sensitivity of your portfolio matches that of a bond benchmark or index, although other factors (such as sectors, quality, callability, etc.) may diverge. None of the above statements are true.
In the following exercise, separate the investments according to the type of Keynesian demand they are: Transactions (0% to 5%), Precautionary (6% to 9%), and Speculative demand (greater than 10%). Investment in each category has the same risk. So you want to invest in the highest return for the same risk. Take each demand type and choose the highest return and put that amount into the investment. For example, if Bond fund A has a return of 4% and Fund B has a return of 5%, they have the same risk, so you would put $70 into bond fund B. You have the following investments Opportunities ad returns. Fidelity Bonds 11% Fidelity Magellan 9% Putman Bonds one 4% Putman bonds Two 12% Growth Stock One 15% Growth and Income 8% Income Fund 3% Putman Growth…
The expected return of a portfolio that is totally invested in the risk free asset is caclculated as: E(R) = WA * E(RA) Wf * E(RB) = 0 * 0.16 1.0 * 0.08 = 0 0.08 = 0.08 or 8% Therefore the expected return of a portfolio with risk free asset is 8% There is no standard deviation for the risk free asset. Please full Explain
An investor who uses only the Treynor ratio to evaluate the performance of a mutual fund is most likely to conclude: a. Total risk is more important than systematic risk b. The fund is not well-diversified. c. A measure of market portfolio performance is essential to evaluate the fund d. The beta of the fund captures the relevant risk of the fund.

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