Your investment advisor proposes a monthly income investmentscheme which promises a variable income each month. You willinvest in it only if you are assured an average monthly income of atleast 670 dollars. Your advisor also tells you that, for the past 61months, the scheme had incomes with an average value of 711dollars and a standard deviation of 120 dollars.a) Create an 80% confidence interval for the average monthlyincome of this scheme. (Round your answers to 4 decimal places,if needed.)b) Based on this confidence interval, should you invest in thisscheme?Yes, since the interval is completely above 670.O No, since the interval is completely above 670.No, since the interval contains 670.Yes, since the interval contains 670.

Answered: Image /qna-images/answer/4e42a934-800f-47f1-9e84-ed4816d66b5a.jpg

Answered: Your investment advisor proposes a…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Calculate the VaR assuming that a person has a capital of $1,000,000.00 MXN and wants to know what could be their worst loss in 10 days when investing in ALSEA. If it is known that their returns have a standard deviation of 1.2% and a confidence level of 95% (1.65). Select one: a.-$62,418.00 MXN. b.-$62,841.00 MXN. c.-$19,800.00 MXN. d.-$19,738.00 MXN.
A portfolio with a 25% standard deviation generated a return of 15% last year when T-bills were paying 4.5%. You are considering adding one more stock to your portfolio, the stock will boost the portfolio’s expected return to 20% while also increases the standard deviation to 30%. If you are risk neutral, should you add the stock? Why or why not?
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Consider a population of 1024 mutual funds that primarily invest in large companies. You have determined that u, the mean one-year total percentage return achieved by all the funds, is 9.80 and that o, the standard deviation, is 0.50. Complete (a) through (c). a. According to the empirical rule, what percentage of these funds is expected to be within +2 standard deviations of the mean? 95 % b. According to the Chebyshev rule, what percentage of these funds are expected to be within +2 standard deviations of the mean? 75 % (Round to two decimal places as needed.) c. According to the Chebyshev rule, at least 88.89% of these funds are expected to have one-year total returns between what two amounts? Between and (Round to two decimal places as needed.)
An investor is trying to decide between 2 mutual funds. Mutual fund #1 offers a slightly higher return than mutual fund #2 so the investor decides that he will invest in mutual fund #1 unless the risk of mutual fund #1 is significantly higher than the risk of mutual fund #2. Using the standard deviation of 101 daily returns as a measure of the risk of the two mutual funds, the investor finds that the standard deviation of mutual fund #1’s daily returns is .81 .95 and the standard deviation of mutual fund #2’s. At the 10% level of significance, should the investor invest in mutual fund #1 or #2?
The Knowles/Armitage (KA) group at Merrill Lynch advises clients on how to create a diversified investment portfolio. One of the investment alternatives they make available to clients is the All World Fund composed of global stocks with good dividend yields. One of their Clients is interested in a portfolio consisting of investment in the All World Fund and a treasury bond fund. The expected percent return of an investment on the All world Fund is 7.80% with a standard deviation of 18.90%. The expected percent return of an investment in a treasury bond fund is 5.50% and the standard deviation is 4.60%. The covariance of an investment in the All World Fund with an investment if a treasury bond fund is -12.4. Which of the funds would be considered riskier? Why? .If KA recommends that the client invest 75% in the All World Fund and 25% in the treasury bond fund, what is the expected return and standard deviation for such a portfolio? What would be the expected return and standard…
Consider a population of 1024 mutual funds that primarily invest in large companies. You have determined that the mean one-year total percentage return achieved by all the funds, is 7.40 and that o, the H, standard deviation, is 1.00. Complete (a) through (c). a. According to the empirical rule, what percentage of these funds is expected to be within ±2 standard deviations of the mean? 95 % b. According to the Chebyshev rule, what percentage of these funds are expected to be within +7 standard deviations of the mean? 97.96 % (Round to two decimal places as needed.) c. According to the Chebyshev rule, at least 88.89% of these funds are expected to have one-year total returns between what two amounts? Between and (Round to two decimal places as needed.)
What is the standard Deviation of Asset A and B Asset A has a Expected Return of 15% and Standard Deviation of 1.41 Asset B has a Expected Return of 15% and Standard Deviation of 5.66
The Knowles/Armitage (KA) group at Merrill Lynch advises clients on how to create a diversified investment portfolio. One of the investment alternatives they make available to clients is the All World Fund composed of global stocks with good dividend yields. One of their clients is interested in a portfolio consisting of investment in the All World Fund and a treasury bond fund. The expected percent return of an investment in the All World Fund is 7.80% with a standard deviation of 18.90%. The expected percent return of an investment in a treasury bond fund is 5.50% and the standard deviation is 4.60%. The covariance of an investment in the All World Fund with an investment in a treasury bond fund is −12.4. (Round your answers for standard deviation to two decimal places.) (a) Which of the funds would be considered the more risky? Why? Neither fund is risky since both are equivalent. A treasury bond fund would be considered the more risky because it has a smaller standard deviation.…
The Knowles/Armitage (KA) group at Merrill Lynch advises clients on how to create a diversified investment portfolio. One of the investment alternatives they make available to clients is the All World Fund composed of global stocks with good dividend yields. One of their clients is interested in a portfolio consisting of investment in the All World Fund and a treasury bond fund. The expected percent return of an investment in the All World Fund is 9.70% with a standard deviation of 17.50%. The expected percent return of an investment in a treasury bond fund is 4.10% and the standard deviation is 4.10%. The covariance of an investment in the All World Fund with an investment in a treasury bond fund is -10.7. a. Which of the funds would be considered the more risky? All World stock fund Why? It has a larger standard deviation v b. If KA recommends that the client invest 75% in the All World Fund and 25% in the treasury bond fund, what is the expected percent return and standard deviation…
The Knowles/Armitage (KA) group at Merrill Lynch advises clients on how to create a diversified investment portfolio. One of the investment alternatives they make available to clients is the All World Fund composed of global stocks with good dividend yields. One of their clients is interested in a portfolio consisting of investment in the All World Fund and a treasury bond fund. The expected percent return of an investment in the All World Fund is 6.30% with a standard deviation of 17.40% . The expected percent return of an investment in a treasury bond fund is 6.00% and the standard deviation is 4.50%. The covariance of an investment in the All World Fund with an investment in a treasury bond fund is -11.2. a. Which of the funds would be considered the more risky? Why? b. If KA recommends that the client invest 75% in the All World Fund and 25% in the treasury bond fund, what is the expected percent return (to 3 decimals) and standard deviation (to 3 decimals) for such a portfolio?…

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