PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 13, Problem 7PS
Summary Introduction
To discuss: The reason why pension fund manager should select a portfolio with a pin.
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Chapter 13 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 13 - Market efficiency True or false? The...Ch. 13 - Prob. 2PSCh. 13 - Market efficiency Which (if any) of these...Ch. 13 - Prob. 4PSCh. 13 - Market efficiency How would you respond to the...Ch. 13 - Market efficiency Respond to the following...Ch. 13 - Prob. 7PSCh. 13 - Prob. 8PSCh. 13 - Market efficiency evidence Which of the following...Ch. 13 - Prob. 10PS
Ch. 13 - Prob. 11PSCh. 13 - Prob. 12PSCh. 13 - Market efficiency implications What does the...Ch. 13 - Prob. 14PSCh. 13 - Prob. 15PSCh. 13 - Abnormal returns Here are alphas and betas for...Ch. 13 - Prob. 18PSCh. 13 - Behavioral finance True or false? a. Most managers...Ch. 13 - Prob. 20PSCh. 13 - Prob. 21PSCh. 13 - Prob. 22PS
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- Which of the following hedge fund types is most likely to have a return that is closest to risk-free?a. A market-neutral hedge fund.b. An event-driven hedge fund.c. A long/short hedge fund.arrow_forwardQUESTION Given a simple world with two assets, a bond fund and a stock fund, clearly detail the steps involved in arriving at the 1) efficient frontier, and 2) market (optimal) portfolio. What is the significance of the Capital Market Line? To be more specific, what relationship does this line depict? Give a brief discussion on its application. One important assumption behind portfolio theory is that investors are “mean-variance maximizers.” What is the meaning of this? Explain why this assumption is important in the delineation of the efficient frontier.arrow_forwardGive the difference between hedge funds and money market funds.arrow_forward
- Explain the concept of immunization within a portfolio management context. How can immunization be achieved for a fixed income strategy? What type of fund would typically employ immunization techniques? Further, can you employ immunization for asset only funds, and if so, how is this different to asset and liability types of funds? Carefully justify your answers.arrow_forwardHow duration and convexity can help investors better manage their fixed-income portfolios. Give examples please.arrow_forwardIf reserve requirements were eliminated in the future, as some economists advocate, what effects would this have on the size of money market mutual funds?arrow_forward
- Why is it harder to assess the performance of a hedge fund portfolio manager than that of a typical mutual fund manager?arrow_forward21) A pension fund would like to add an investment to its portfolio. Investment A has a Sharpe Ratio of 1.3 and investment B has a Sharpe Ratio of 1.5. Will investment B be a better choice?arrow_forwardWhat are the two ways a sinking fund can be handled? Whichmethod will be chosen by the firm if interest rates have risen? Ifinterest rates have fallen?arrow_forward
- Describe the SML in words. What is it saying about how investors form required rates of return? Thoroughly evaluate the implications of the SML's message.arrow_forwardYou are looking for an investment vehicle that has two characteristics. First, you want an incentive structure for asset managers where they earn more money when you (the investor) earns more money. Second, you want a mostly diversified pool of investments. Which vehicle is your best option? O Hedge fund Closed-end mutual fund Open-end mutual fundarrow_forwardWhy would an investor prefer a constrained portfolio optimization approach?arrow_forward
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