Your friend never took a personal finance class, but found out you did. So he comes to you for advice. He has two funds offered through his employer. One is a high growth mutual fund with 10% growth. The other is a moderate growth index fund offering 7% growth. At first glance it seems like an obvious choice, but the mutual fund is taking a 2.7 % fee of your friends $500 deposit, while the index fund is taking only a 0.7% fee. Over his 40 year career, what is the future value of the high growth fund after accounting for the fee? I A) $142,832.61 B $1,514,331,61 C) $1,028,330.61 D $1,428,328.61 E $428,332.61
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- Suppose that a mutual fund agent approaches you and promote a fund which allows you to withdraw money from your Employment Provident Fund (EPF) to invest. From the analysis of the agent, the fund expected to pay up to 11% return, and you know that EPF paid an average 6% return and treasury’s return fixed at 2.75%. Based on the discussion in this chapter and in your opinion, are you going to take the investment? Justify your answera friend comes to you for advice. He is faced with two investment choices.)(Choice 1: Place a RM 50,000 investment with an index fund for one year. (An index fund is a mutual fund that invests in a portfolio that tracks the index).)Choice 2: Place the RM 50,000 with an Index linked bank deposit that a local bank is offering. Under this scheme, a depositor gets back his entire capital and zero interest if the FBMKLCI is lower than the day he placed his deposit. On the other hand, if the FBMKLCI rises, then the depositor gets his initial deposit 10% of the percentage rise in the FBMKLCI over the one year.)(i) (Demonstrate using graph, the payoff profile of each alternative (plot the maximum loss, maximum profit and break even point)) (ii) Describe the risk profile of each alternative.) (iii) Explain two key factors that your friend ought to consider in deciding between the two alternatives)A stock broker is required to keep $100,000 in low risk funds. He splits the money between a fund that has an interest rate of 9.2% and one that pays 8.6%. In the first year, the money earns $8960 in interest. How much of the $100,000 was invested in the fund with 9.2% interest? Fill in the blank with your answer.Type a numeric answer only, do not type the $ sign or commas.
- You currently own shares in Berkshire Mutual Fund (BMF). Your broker calls and recommends buying shares in a small-capitalization fund managed by Wonderland Investment Group (WIG). Yourbroker says that this fund will provide significant diversification benefits for your existing holdings. She gives you the following statistics based on the performance of the two funds over the last year. Please don,t copy wrong answer.Write correct answer.Answer must be correct. and do all calculation. its carry huge .Answer follow image. Must show all calculation.An investor has $80,000 to invest in Certificates of Deposit (CD) and a mutual fund. The CD yields 7% and the mutual fund yields 8%. The mutual fund requires a minimum investment of $8,000 and the investor requires at least twice as much should be invested in CDs as in the mutual fund. How much should be invested in each to maximize the return? What is the maximum return? Show your work and explanations setting this problem up. Variables should clearly be defined. Show all your work.Suppose you have recently accepted a new job and are setting up your retirement allocations within the firm's 401k plan. The plan options contain two risky mutual funds, A and B. You may assume that all fees are the same across the two funds. Fund A has an expected return of 6% and the standard deviation of returns is 12%. Fund B has an expected return of 7% and the standard deviation of returns is 15%. The correlation between returns on the two funds is 0. The plan also contains a Treasury fund which provides a risk-free return of 3%. A Suppose you can only invest in one of the two risky mutual funds (A or B), but can combine it with the Treasury fund in any proportions you wish. Which of the two mutual funds would you choose and why B Maintaining the restrictions on your investment choices from the last question, what is the best expected return you could achieve if you set up a portfolio with a standard deviation of returns equal to 10%? (Please express your answer in percentage…
- Suppose Majtrk has a front-end load fee of 9%. If you purchase 100 shares of this fund at the NAV, you will pay a commission of S in one month, you sell the shares, you pay a redemption fee at that time. If you are interested only in funds without any fee, you the quotations as listed in the table, it is 11, to use additional online resources to find no-load funds, because using only to determine the amount of any front-end load fee that the fund may charge.You can earn thousands of dollars more from your mutual funds. The secret is to purchase no-load (no front-end commission) funds directly from companies specializing in this area. You can save 6.00% commission compared to "loaded" mutual funds when you buy no-load funds. That means you earn $3,750 more on a $20,000 investment over 9 years. In this situation, the average annual interest rate of the fund is most closely which answer below?As a wealthy individual investor, you are planning to invest your $2 million in a fund of funds which invests in 2 different hedge funds, namely hedge fund A and B. The incentive fees are 20% for all funds including the fund of funds. The incentive fee is applicable when a fund earns a positive return. Let’s assume that funds A and B generate 10% and -15% gross returns, respectively. Given the information above, please fill out the below table. You can copy and paste the table to the answer section and fill it out there. You may want to show your calculations in the space below the table. Fund A Fund B Fund of Funds Start of year (millions) $1.00 $1.00 $2.00 End of year (millions) $ $ $ Gross rate of return % % % Incentive fee (millions) $ $ $ End of year, net of fee $ $ $ Net rate of return % % %
- Investor Matt has $661,000 to invest in a CD and a mutual fund. The CD yields 7.3% and the mutual fund yields an average of 7.7%. The mutual fund requires a minimum investment of $20,000, and Matt requires that at least 4 times as much money be invested in the CD as in the mutual fund. You must invest in order to maximize his return. What is the maximum return? Enter 0 if no investment can be made satisfying the requirements. $ . Round to the nearest cent.Investor Dan has $740,000 to invest in a CD and a mutual fund. The CD yields 3.6% and the mutual fund yields an average of 8.4%. The mutual fund requires a minimum investment of $19,000, and Dan requires that at least 4 times as much money be invested in the CD as in the mutual fund. You must invest in order to maximize his return. How much should you invest in the CD? Enter 0 if no investment can be made satisfying the requirements. $ . Round to the NEAREST CENT.Assume the role of a financial advisor. You have 3 new clients. Each of them came to you with $100,000 to invest. You suggest to each other them to put the money into mutual funds. What mutual funds do you suggest for each client and why. Support your recommendations. Jose - 29 Years of Age. Working. Makes $250,000 a year. Married. No kids. No immediate need for cash. Investing Risk Tolerance = High. Cynthia - 49. Single. 3 kids. Working. Makes a modest annual income. Ages 13, 15, 17. All kids plan to attend college. Plans to use some of this money to help pay for college tuition. Investing Risk Tolerance = Moderate. Jackie - 80. Retired. Receives a modest retirement income. Needs money to help pay monthly expenses. She is healthy. She also has three older siblings in their 90's. Investing Risk Tolerance Low.