Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Chapter 13
Financial Planning Exercise 7
Calculating approximate yield on mutual fund
About a year ago, Elliot Cox bought some shares in the Axis Fund. He bought the fund at $24.50 a share, and it now trades at $26.00. Last year, the fund paid dividends of 40 cents a share and had
- Using the approximate yield formula, what
rate of return did Elliot earn on his investment? Round the answer to two decimal places.
% - Repeat the calculation using a financial calculator. Round the answer to two decimal places.
% - Would he have made a 20% rate of return if the stock had risen to $30 a share?
-Select-YesNo
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- Pls help ASAParrow_forwardPortfolio Required Return Suppose you manage a $6 million fund that consists of four stocks with the following investments: Stock Investment Beta A $900,000 1.50 B 1,500,000 -0.50 C 2,100,000 1.25 D 1,500,000 0.75 If the market's required rate of return is 11% and the risk-free rate is 7%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. %arrow_forwardO B *Book Problem Walk Through Suppose you are the money manager of a $4.24 mbon investment fund the fund consists of four stocks with the following investments and beta Stock Beta 1.50 (0.00) 1.25 8.75 W Investment $320,000 500,000 1.320,000 1,000,000 C D the market's required rate of retums 11% and the risk free rate is what is the fund's requered rate of retum De not found intermedate caldabone Round your answer to two decimal placearrow_forward
- Quiz Instructions Question 1 1 pts A pension fund manager is considering three assets. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill yielding 0.06. Info of the risky funds is as follows: Expected ret. std. dev. Stock fund 0.22 0.27 Bond fund 0.12 0.14 The correlation between the fund returns is 0.5. What is the expected return of the optimal risky portfolio? Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.arrow_forwardINV 1 6d You have decided to invest in three mutual funds: one in equities, one in long corporate and government bonds, and a money market fund invested in T-bills yielding 5%. Your estimate of the relevant parameters for the equities and bond funds are as follows: Expected Return Standard Deviation Equities .15 .30 Bonds .06 .09 The correlation between the fund returns is 0.12. Without the money market fund, what would be the weights of a portfolio on the best feasible CAL, composed of the equities and bond funds which would be expected to return 10%, and what would be its standard deviation?arrow_forwardProblem 7-8 A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 4%. The characteristics of the risky funds are as follows: Stock fund (S) Bond fund (B) Expected Return 23% 14 Standard Deviation The correlation between the fund returns is 0.12. Sharpe ratio 29% 17 What is the Sharpe ratio of the best feasible CAL? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 places.) Check my workarrow_forward
- INV 1 6f You have decided to invest in three mutual funds: one in equities, one in long corporate and government bonds, and a money market fund invested in T-bills yielding 5%. Your estimate of the relevant parameters for the equities and bond funds are as follows: Expected Return Standard Deviation Equities .15 .30 Bonds .06 .09 The correlation between the fund returns is 0.12. Compare the portfolios in #4 and #5. Is this consistent with what you would expect when adding the T-bill money market fund as essentially the risk-free asset?arrow_forwardaa.2arrow_forwardQuestion 888 M Full explain this question and text typing work only thanksarrow_forward
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