INVESTMENTS(LL)W/CONNECT
INVESTMENTS(LL)W/CONNECT
11th Edition
ISBN: 9781260433920
Author: Bodie
Publisher: McGraw-Hill Publishing Co.
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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(a) The variables have been stripped of their names. Which one do you think is "household income" ?(b) Calculate the mean, median, and standard deviation of household income. Do these numbers fit with your expectations?   (c) Suppose you have two histograms: one where the mean equals the median, and one where the mean is different from the median. How would you expect the two histograms to differ?
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