The goal of immunization is to A. make the effective duration of the portfolio zero В. generate a return in excess of the benchmark using factor mismatches C. earn a pre-determined return, over a specified time horizon, irrespective of interest rate changes D. provide funding of a future liability from coupon and matured principal flows

Q: Suppose that you are a fixed-income portfolio manager running a fully active managed fund. Which of…

A: You run a fully active managed fund as a fixed-income portfolio manager. This means that your…

Q: Consider the diagram below. According to the CAPM, which asset is currently being underpriced by the…

A: The security market line shows the relationship between expected return and market risk or beta.…

Q: What is a satisfiable investment? When the present value of benefits surpasses the cost of an…

A: This question explains about the present value of benefits surpasses and the cost of an investment…

Q: The modern portfolio theory suggests that investors should keep the diversification of investment…

A: With reference to the portfolio, the term " minimum possible" refers to that investor expects…

Q: The value of a security:   a. Decreases as the investor’s planned holding period increases.   b.…

A: Holding period: Holding period is the time than an investor holds a security for. This simply means,…

Q: An inflation hedge is an asset that increases in value at a rate equal to or greater than the rate…

A: Hedging is technique of reducing risk. This reduction in risk also results typically in a decrease…

Q: Asset allocation is performed to A) reduce the load that intermediaries charge maximize the earning…

A: Asset Allocation means the process of allocating money across different financial assets (such as…

Q: An estimation by marginal investor, a higher expected return is earned on A. more risky securities…

A: An estimation by marginal investor , a higher expected return is earned on more risky securities.

Q: This method evaluates the return of an investment by dividing the annual average income by the…

A: By dividing the annual average income by the average investment, return on investment is calculated.…

Q: If the expected rate of return for the market is not much greater than the risk-free rate of return,…

A: If the expected rate of return for the market is not much greater than the risk-free rate of return,…

Q: The desired rate of return on an investment should reflect the degree of risk involved. A.   True…

A: Riskier investments may give higher returns to the investors as they provide favorable ratio of risk…

Q: of each of the following bonds, if interest (coupon) is paid quarterly? bond if interest (coupon) is…

A: Given                   Par Value Coupon Rate Years to Maturity YTM Price 5000 6% 10 ? 3740…

Q: If the inflation rate is positive, the expected NPV of an investment will be:  A.understated if real…

A: The nominal discount rate will be reflection of the combination of real interest rate and the rate…

Q: nt is more​ liquid, the return you receive will

A: Liquid investments are those investments that can be easily sold for cash.

Q: Discounting an investment’s cash flows using the internal rate of return will result in which of the…

A: Introduction: The internal rate of return (IRR) is a research and consulting metric used to assess…

Q: Assess how the Modern Portfolio Theory (MPT) may be used by investors to classify, estimate, and…

A: Modern portfolio theory is the investment related theory that allows investors to manage their risk…

Q: The static GAP focuses on monitoring net interest income in the long term.   Select one: True…

A: The Static GAP focuses on monitoring net interest income in the short term but it can be calculated…

Q: 4. How much final amount would Abraham receive if he invest P100,000 for 1 year and 3 months at 11%…

A: Simple interest: As the name indicates it is a simple interest computed on the amount of principal.…

Q: Short-term investments have higher maturity risks as compared to long-term investments.  A. TRUE B.…

A: Short term instruments typically mature within one year and have less maturity risk compared to long…

Q: Assets are priced such that _____________________ increase with the riskiness of future payoffs. A)…

A: Solution:- Payoff means the amount which is receivable on maturity.

Q: Methods that ignore the time value of money in capital investment appraisal include which of the…

A: Net present value – Net present value is the difference between present value of cash inflows of…

Q: The maximum rate of return needed to induce an investor to purchase or hold a security is referred…

A: The statement is TRUE.Explanation:Step 1:An investor's required rate of return is the lowest…

Q: The most accurate way to analyze the profitability of an investment is to compute the payback…

A: Payback period is the period for time taken of project to repay the initial investment. Payback…

Q: When valuing a short-term security, we commonly use:

A: Introduction: Short-term securities refer to securities that have a life tenure of less than one…

Q: Why we can make money more than the risk-premium under the CAPM

A: Risk premium is the expected rate of return on an investment which is above the risk-free rate of…

Q: Both simple and compound interest represent the rate of return (ROR) on investments Select one: True…

A: Formula for simple interest = Principal x Interest x Time Formula for compound interest = Principal…

Q: According to the capital-asset pricing model (CAPM), a security's expected return is equal to the…

A: Capital Asset Pricing Model (CAPM) approach is a quantitative approach that helps in determining the…

Q: Identify two disadvantages of using the payback period for comparing investments.

A:

Q: Asset pricing Models provide a logical basis for computing the risk premiums and determining the…

A: Capital Asset Pricing Model (CAPM) is tool used to calculate the systemic risk of a asset. CAPM…

Q: The risk of the portfolio depends not only on the individual risks of the assets but also on the…

A: A portfolio refers to a collection or combination of financial assets held by an individual,…

Q: increased change in value that occurs because longer maturity investments are affected more by…

A: Bonds are a source of investment for investors and bonds are paid an annual coupon and par value is…

Q: Whenever you make an investment decision, you need to consider its impacts on the diversification of…

A: Investment decision and diversification go hand in hand. One should be careful while making an…

Q: The expected value of an investment: Answer a. Is what the owner will receive when the investment is…

A: Expected Return refers to return anticipated by an investor while making investment. It may differ…

Q: what can you say about the price movements of the stock? (TEL)

A: TEL is the ticker of TE Connectivity Ltd. This stock is listed in the NYSE.

Q: PLS HELP ASAP

A: Exchange-Traded Funds (ETFs) utilize various investment strategies to achieve their objectives,…

Q: Speculation tends to have a high risk and high rate of return compared to investment Select one: O…

A: The main target in both the cases are making profit, however there are major differences between the…

Q: Which of the following investment strategies involves generating a higher expected rate of return…

A: The risk and return of investment are usually positively related. An investor cannot earn an extra…

Q: ine the difference between Passive and Active Strategies for a fixed

A: The portfolios are managed by the experienced fund managers and depending objective and mission of…

Q: In the context of the Pastor-Stambaugh multifactor model (PSM), the relevant risk factors are the…

A: Risk factors in both the Pastor-Stambaugh and Fama-French models include: Market Risk (MKT): This…

Q: he simple model of finacnial planning assumes which of thr following: Only assest are expected to…

A: When companies sales grow than along with sales there will be increase in other things also because…

Q: An advantage of the internal rate of return method is that a.it considers the time value of money.…

A: Capital budgeting is the process of selecting and choosing best alternatives among the available…

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.