John Irish. CFA, is an independent investment adviser who is assisting Alfred Darwin, the head of the Investment Committee of General Technology Corporation, to establish a new pension fund. Darwin asks Irish about international equities and whether the Investment Committee should consider them as an additional asset for the pension fund.
a. Explain the rationale for including international equities in General‘s equity portfolio. Identify and describe three relevant considerations in Formulating your answer.
b. List three possible arguments against international equity investment and briefly discuss the significance of each.
c. Te illustrate several aspects of the performance of international securities over time Irish shouts Darwin the accompanying graph of investment results experienced by a U.S. pension fund in the recent past. Compare the performance of the US. dollar and non-U.S. dollar equity and fixed-income asset categories, and explain the significance of the result of the account performance index relative to the results of the four Individual asset class indexes.
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Essentials Of Investments
- You are a prospective fund manager to a life insurance company. You propose to manage its assets utilising a liability-driven strategy. Which of the following actions would your strategy involve? A) Aligning the coupon payments and maturities from your proposed portfolio of fixed income securities with the company’s anticipated claim payments. B) Aligning the dividends and capital appreciation of your proposed portfolio of equities with the company’s anticipated claim payments. C) Managing the sector-spread of your proposed portfolio to capitalise on the margins offered by different governments and other institutions’ fixed income securities. D) Managing the sector-spread of your proposed portfolio to benefit from a positive sloping yield curve.arrow_forwardRobert Black and Carol Alvarez are vice presidents of Western Money Management andcodirectors of the company’s pension fund management division. A major new client, the California League ofCities, has requested that Western present an investment seminar to the mayors of the represented cities. Blackand Alvarez, who will make the presentation, have asked you to help them by answering the following questions:a. What are a bond’s key features?b. What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky?c. How is the value of any asset whose value is based on expected future cash flows determined?d. How is a bond’s value determined? What is the value of a 10-year, $1,000 par value bond with a 10%annual coupon if its required return is 10%?e. 1. What is the value of a 13% coupon bond that is otherwise identical to the bond described in part d?Would we now have a discount or a premium bond?2. What is the value of a 7% coupon bond with these…arrow_forwardWhich of the following is true ? Select one : a . Investment bankers earn a spread based on the success of their placements when they underwrite using a best - efforts basis. b . Investment bankers earn fees based on the success of their placement when they underwrite using firm - commitment basis. c . With best - efforts underwriting, Investment bankers actos principais because they purchase securities from the issuer and sell them at a higher price, d. An investment banker is acting as principais when a firm - commitment offering of securities . e . Answers B and C only .arrow_forward
- w Select the appropriate term to complete the sentences. A offers investors the opportunity to pool their investment dollars with a group of other investors, which in turn allows them the ability to purchase multiple security investments. The investments are collected into a single Mutual funds may prove to be a smarter investment option for the investor that prefers to investment risk.arrow_forwardTopic: Exploring the Growing Popularity of Mutual Funds in US Capital Markets Explain why this topic is interesting in the field of business. What is the brief history of the problem? This consists of a summary and results of prior research articles Finally, the learner needs to demonstrate why this proposed study is needed for academic research. Explain why it will expand academic literature, contribute to society, or the professional environment. Who is the intended audience for this research? Dear Expect please note the topic highlighted above as a guideline for answering the questions that follow. This is a dissertation.Thank you.arrow_forwardYour client prefers to invest in ETFS because they are cost effective and provide broad diversification. However, she doesn't have the time or knowledge to select that appropriate ETFS and needs professional management for selection and management of the asset allocation within the portfolio. What fee-based arrangement would you recommend? O a) A Multi-Disciplinary Account. O b) An ETF Wrap Account. Oc) A Discretionary Account. d) A Mutual Fund Wrap Account.arrow_forward
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- BOND VALUATION Lee Teng and Hu Feng are vice presidents of Oriental Asset Management and codirectors of the company’s pension fun management division. A major new client, the Shandong Network of Cities, has requested that Oriental Asset Management present an investment seminar to the mayors of the represented cities. Lee and Hu, who will make the presentation, have asked you to help them by answering the following questions. What are the bond’s key features? What are call provisions or sinking fund provisions? Do these provisions make bonds more or less risky? How is the value of any asset whose value is based on expected future cash flows determined? How is a bond’s value determined? What is the value of a 10-years, $1,000 par value bond with a 10% annual coupon if its required return is 10%? What is the value of a 13% coupon bond that is otherwise identical to the bond described in Question 4? Would we now have a discount or a premium bond? What is the value of 7% coupon bond with…arrow_forwardYou are an investment advisor. During a consultation a client says to you "I want to diversify my portfolio. I currently hold investments in two companies, but I've read that if i add more assets to my portfolio, i can eliminate risk completely." Required. Using a diagram, advise the investor as to whether his assumption is correct.arrow_forwardb) Reuel Capital case study Joseph Mhofu is a fixed income portfolio manager for Reuel Capital. Mhofu is reviewing the portfolios of several pension clients that have been assigned to him to manage. Two of these portfolios are Woodlands Groove and LETS pension plan has the following characteristics: Sector Singapore treasury Singapore agencies Singapore Corporates Singapore mortgages Singapore ABS Woodlands Groove Allocation (ii) LETS Allocation 10.1% 14.5% 20.9% 33.7% 8.20% 12.6% LETS Duration 7.54 9.02 4.52 1.33 14.6% 23.7% 13.8% 11.4% 18.0% Non-Singapore governments 18.5% Bond index benchmark for Woodlands Groove bond portfolio has an effective duration of 4.16. (1) Calculate the duration of Woodlands Groove bond portfolio and asses the interest rate risk of the portfolio versus the benchmark. Woodlands Groove Spread Duration 2.00 3.22 0.00 7.20 5.80 4.65 3.67 2.50 Calculate the spread duration of LETS pension plan portfolio and evaluate the credit risk of the portfolio versus the…arrow_forward