J. P. Morgan Asset Management publishes information about financial investments. Over the past 10 years, the expected return for the S&P 500 was 5.04 with a standard deviation of 19.45% and the expected return over that same period for a Core Bonds fund was 5.78% with a standard deviation of 2.13% (J. P. Morgan Asset Management, Guide to the Markets, 1st Quarter, 2012). The publication also reported that the correlation between the S&P 500 and Core Bonds is -0.32. You are considering portfolio investments that are composed of an S&P 500 index fund and a Core Bonds fund. A. Using the information provided, determine the covariance between the S&P 500 and Core Bonds. Round your answer to two decimal places. If required enter negative values as negative numbers. B. Construct a portfolio that is 50% invested in an S&P 500 index fund and 50% in a Core Bond fund. Round your answers to one decimal place. r=______x+__________y In percentage terms, what is the expected return and standard deviation for such a portfolio? Round your answers to two decimal places. expected return ____% standard deviation ___ % C. construct a portfolio that is 20% invested in an S&P 500 index fund and 80% invested in a Core bond fund. Round your answers to one decimal place. r=______x+__________y In percentage terms, what is the expected return and standard deviation for such a portfolio? Round your answers to two decimal places. expected return ____% standard deviation ___ % D. construct a portfolio that is 80% invested in an S&P 500 index fund and 20% invested in a Core bond fund. Round your answers to one decimal place. r=______x+__________y In percentage terms, what is the expected return and standard deviation for such a portfolio? Round your answers to two decimal places. expected return ____% standard deviation ___ % E. Which of the portfolios in parts (b), (c), and (d) above has the largest expected return? which has the smallest standard deviation? which of these portfolios is the best investment alternative? F. discuss the advantages and disadvantages of investing in the three portfolios in parts b, c, d. would you prefer investing all of your money in the s&p 500index, the core bond fund, or one of the 3 portfolios? why?
Unitary Method
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Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
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The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
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J. P. Morgan Asset Management publishes information about financial investments. Over the past 10 years, the expected return for the S&P 500 was 5.04 with a standard deviation of 19.45% and the expected return over that same period for a Core Bonds fund was 5.78% with a standard deviation of 2.13% (J. P. Morgan Asset Management, Guide to the Markets, 1st Quarter, 2012). The publication also reported that the
A. Using the information provided, determine the
B. Construct a portfolio that is 50% invested in an S&P 500 index fund and 50% in a Core Bond fund. Round your answers to one decimal place.
r=______x+__________y
In percentage terms, what is the expected return and standard deviation for such a portfolio? Round your answers to two decimal places.
expected return ____%
standard deviation ___ %
C. construct a portfolio that is 20% invested in an S&P 500 index fund and 80% invested in a Core bond fund. Round your answers to one decimal place.
r=______x+__________y
In percentage terms, what is the expected return and standard deviation for such a portfolio? Round your answers to two decimal places.
expected return ____%
standard deviation ___ %
D.
construct a portfolio that is 80% invested in an S&P 500 index fund and 20% invested in a Core bond fund. Round your answers to one decimal place.
r=______x+__________y
In percentage terms, what is the expected return and standard deviation for such a portfolio? Round your answers to two decimal places.
expected return ____%
standard deviation ___ %
E. Which of the portfolios in parts (b), (c), and (d) above has the largest expected return?
which has the smallest standard deviation?
which of these portfolios is the best investment alternative?
F. discuss the advantages and disadvantages of investing in the three portfolios in parts b, c, d.
would you prefer investing all of your money in the s&p 500index, the core bond fund, or one of the 3 portfolios?
why?
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