Investments
Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
Question
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Chapter 28, Problem 8CP

A

Summary Introduction

To explain: The risk objective of investment policy.

Introduction: The objective of risk management policy is to provide funds with a higher amount according to the interest rate but after a long period of time. Here, in this case, the time period is 18 years and the rate is 40%.

B

Summary Introduction

To explain: Pretax rate for the investment policy.

Introduction: While evaluating the risk a large amount of investment is required and put that amount into risk for a long period but after time it gives a long return.

C

Summary Introduction

To explain: All the constraints of investment policy.

Introduction: Constrains are time horizon, liquidity requirements, tax concern and unique circumstances. Out of these constrains tax concern and unique circumstances are profitable.

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