A.
To determine: Justification required in the investment in the suggested fund and the funds alpha.
Introduction
Alpha is a proportion of the dynamic profit for an investment, the performance of that investment when compared to an appropriate market index. It is expressed as the difference among actual expected return and expected rate for an investment.
B.
To determine The passive portfolio that comprised the market index portfolio and
Introduction
A passive portfolio system centers on boosting the diversification with little expectational input. A passive portfolio subsidizes basically reflects a market index.The passive portfolio aims to produce a return that is equivalent to the chosen index instead of outperforming it.

Want to see the full answer?
Check out a sample textbook solution
Chapter 9 Solutions
INVESTMENTS-CONNECT PLUS ACCESS
- Correct solnarrow_forwardsolve itarrow_forward6. Calculate the price of a dividend paying stock using the following information, assuming the price is equal to the present value of all future dividends one will receive from owning the stock. (Hint: treat the stock as a growing perpetuity) Dividend $4.50 Growth rate 2% Required return 12% *arrow_forward
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education





