Emma Li is considering investing in two securities, A and B, and the relevant information is given below: State of Economy Probability Return on Security A (%) Return on Security B (%) Bear 0.2 4 1.2 Bull 1-0.2 10 1.2 Suppose Emma borrowed from her friend 99 shares of security B, which is currently sold at $74, and sold all shares of the security. (She promised her friend she would pay her back in a year with the same number of shares of security B). Then she bought security A with the proceeds obtained in the sales of security B shares and the cash of $2,549 she owned. Calculate the standard deviation of her portfolio. Report your answer in decimal form, rounded to 4 decimal points.

Emma Li is considering investing in two securities, A and B, and the relevant information is given below: State of Economy Probability Return on Security A (%) Return on Security B (%) Bear 0.2 4 1.2 Bull 1-0.2 10 1.2 Suppose Emma borrowed from her friend 99 shares of security B, which is currently sold at $74, and sold all shares of the security. (She promised her friend she would pay her back in a year with the same number of shares of security B). Then she bought security A with the proceeds obtained in the sales of security B shares and the cash of $2,549 she owned. Calculate the standard deviation of her portfolio. Report your answer in decimal form, rounded to 4 decimal points.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Assume the role of a financial advisor. You have 3 new clients. Each of them came to you with $100,000 to invest. You suggest to each other them to put the money into mutual funds. What mutual funds do you suggest for each client and why. Support your recommendations. Jose - 29 Years of Age. Working. Makes $250,000 a year. Married. No kids. No immediate need for cash. Investing Risk Tolerance = High. Cynthia - 49. Single. 3 kids. Working. Makes a modest annual income. Ages 13, 15, 17. All kids plan to attend college. Plans to use some of this money to help pay for college tuition. Investing Risk Tolerance = Moderate. Jackie - 80. Retired. Receives a modest retirement income. Needs money to help pay monthly expenses. She is healthy. She also has three older siblings in their 90's. Investing Risk Tolerance Low.
Suppose you invest $5,000 into a mutual fund that is expected to earn a rate of return of 7%. The amount of money you will have in 10 years is closest to which of the following? The amount you will have in 25Lyears is closest to which of the following? O 1) $53,500; $802,500 O 2) $2,552.56; $3,257.79 O 3) $9,835.76; $27,137.16 O 4) $3,138; $ 1,311,892 5) None of the answers are correct
Smith invests $5,000 at t = 0 into a fund which earns interest under the following model: %3D (0.06 8(t) = {0.03t (0.03t + at² 0
1. A mutual fund has an offer price of $7.82 per share and a net asset value of $7.41. What is the sales charge percent? (Round to the nearest tenth.) A. 5.2% B. 5.5% C. 6.5% D. 94.8% 2. If Tanya's husband were to die, she and her children could live on $64,400 per year. Tanya makes $35,100 annually, and estimates additional income of $21,500 from other sources. How much insurance should she purchase on her husband to cover the shortfall, assuming a 16.7% prevailing interest rate? (Round your answer to the nearest $1,000.) A. $40,000 B. $42,000 C. $47,000 D. $48,000
The following tutorial questions serve as practice questions on TVM and Bond Valuation. (Show Working) 1. Your grandfather left an inheritance for you of $100,000. However you can only drawdown on the investment as follows: Years 1 – 3 $15,000 each year Year 4 to 6 $10,000 each year Year 7 $25,000 Interest on the fund is 5%. a. What is the present worth of this inheritance? b. Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?
Saylor, who earned $152 906 profit from his gamble on bitcoin, decides to invest half of the money in an ETF fund that is estimated to return 9.25% compounding monthly. How much will his ETF investment be worth after 10 years? Select one: a. $192 121.75 b. $85 342.68 c. $201 329.34 d. $112 121.75
Array intends to allocate her savings into various types of financial investments. She has $184,100 to invest in stocks, bonds, and mutual funds according to her chosen 10 2 10 ratio 779 investment? Round your answers to the nearest dollar. Stocks: $ Bonds: $ respectively. How much should she invest in each type of Mutual Funds: $
Array intends to allocate her savings into various types of financial investments. She has $194,400 to invest in stocks, bonds, and mutual funds according to her chosen respectively. How much should she invest in each type of investment? Round your answers to the nearest dollar. 4 1 7 ratio : 3 9 11 Stocks: $ Bonds: $ • Mutual Funds: $
You are going to invest in a stock mutual fund with a front-end load of 5.5 percent and an expense ratio of 1.41 percent. You also can invest in a money market mutual fund with a return of 2.5 percent and an expense ratio of 0.40 percent. If you plan to keep your investment for 2 years, what annual return must the stock mutual fund earn to exceed an investment in the money market fund? What if your investment horizon is 10 years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Related to Checkpoint 5.5) (Solving for n) Jack asked Jill to marry him, and she has accepted under one condition: Jack must buy her a new $300,000 Rolls-Royce Phantom. Jack currently has $50,900 that he may invest. He has found a mutual fund with an expected annual return of 4.5 percent in which he will place the money. How long will it take Jack to win Jill's hand in marriage? Ignore taxes and inflation.
Frank Zanca is considering three different investments that his broker has offered to him. The different cash flows are as follows: End of Year A 1 $300 B C $400 2 $300 3 $300 4 $300 $300 $600 5 $300 6 $300 $300 $300 $600 7 8 Because Frank only has enough savings for one investment, his broker has proposed alternative C to be, according to his expertise, "the best in town." However, Frank questions his broker. Calculate the present value of each investment, assuming a 15% discount rate. Which is Frank's best alternative? Select one: a. Investment A O b. Investment B c. Investment C O d. He should not invest in any of the suggested investments O e. All of the investments are equally good

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