Imagine you are a provider of portfolio insurance. You are establishing a 4-year program. The portfolio...

Imagine you are a provider of portfolio insurance. You are establishing a 4-year program. The portfolio you manage is currently worth $122 million, and you hope to provide a minimum return of 0%. The equity portfolio has a standard deviation of 19% per year, and T-bills pay 6% per year. Assume for simplicity that the portfolio pays no dividends (or that all dividends are reinvested).

a-1. How much should be placed in bills? (Enter your answer in millions rounded to 2 decimal places.)

a-2. How much in equity? (Enter your answer in millions rounded to 2 decimal places.)

b-1. What is the delta if the new portfolio falls by 6% on the first day of trading? (Negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

b-2. Complete the following: (Enter your answer in millions rounded to 4 decimal places.)

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Imagine you are a provider of portfolio insurance. You are establishing a 4-year program. The portfolio...

Imagine you are a provider of portfolio insurance. You are establishing a 4-year program. The portfolio you manage is currently worth $104 million, and you hope to provide a minimum return of 0%. The equity portfolio has a standard deviation of 22% per year, and T-bills pay 4% per year. Assume for simplicity that the portfolio pays no dividends (or that all dividends are reinvested). a-1. How much should be placed in bills? (Do not round intermediate calculations. Round your...

Imagine you are a provider of portfolio insurance. You are establishing a four-year program. The portfolio...

Imagine you are a provider of portfolio insurance. You are establishing a four-year program. The portfolio you manage is currently worth $220 million, and you promise to provide a minimum return of 0%. The equity portfolio has a standard deviation of 25% per year, and T-bills pay 4% per year. Assume for simplicity that the portfolio pays no dividends (or that all dividends are reinvested). a-1. What percentage of the portfolio should be placed in bills? (Input the value as...

Imagine you are a provider of portfolio insurance. You are establishing a four-year program. The portfolio...

Imagine you are a provider of portfolio insurance. You are establishing a four-year program. The portfolio you manage is currently worth $190 million, and you promise to provide a minimum return of 0%. The equity portfolio has a standard deviation of 25% per year, and T-bills pay 5.5% per year. Assume for simplicity that the portfolio pays no dividends (or that all dividends are reinvested). a-1. What percentage of the portfolio should be placed in bills? (Input the value as...

Imagine you are a provider of portfolio insurance. You are establishing a four-year program. The portfolio...

Imagine you are a provider of portfolio insurance. You are establishing a four-year program. The portfolio you manage is currently worth $160 million, and you promise to provide a minimum return of 0%. The equity portfolio has a standard deviation of 25% per year, and T-bills pay 6.5% per year. Assume for simplicity that the portfolio pays no dividends (or that all dividends are reinvested). a-1. What percentage of the portfolio should be placed in bills? (Input the value as...

Please show all work. Imagine you are a provider of portfolio insurance. You are establishing a...

Please show all work. Imagine you are a provider of portfolio insurance. You are establishing a 4-year program. The portfolio you manage is currently worth $118 million, and you hope to provide a minimum return of 0%. The equity portfolio has a standard deviation of 30% per year, and T-bills pay 8% per year. Assume for simplicity that the portfolio pays no dividends (or that all dividends are reinvested). How much should be placed in bills? How much in equity?...

Imagine you are consulting for an Internet service provider (ISP) that has hired you to research...

Imagine you are consulting for an Internet service provider (ISP) that has hired you to research the impact of customer retention on their bottom line. Assume that their current monthly turnover is 3%, they have 1000 subscribers, they have set monthly subscriber fees at $25, and they estimate that their cost to serve customers is $10. Further, while they report that they do not have an estimate for customer acquisition cost, you do a little number crunching and find that...

3. Testing for equal proportions Imagine that you are contracted by a local news provider to...

3. Testing for equal proportions Imagine that you are contracted by a local news provider to study consumer demographics in relation to three different types of news media: print (newspaper), Internet, and television. In prior market research, the company has classified each of its customers as receiving news content primarily from only one of these three sources, and as either urban or rural residents. In order to help design effective marketing strategies, you are asked to perform a test for...

Imagine you work for a large service provider (e.g., a telecom company). Discuss the importance of...

Imagine you work for a large service provider (e.g., a telecom company). Discuss the importance of information security, considering that a good percentage of your sales force, service people, and managers work remotely at least part of the time.

Imagine that you are preparing taxes for a local tax service provider. A married couple named...

Imagine that you are preparing taxes for a local tax service provider. A married couple named Judy and Walter Townson have come to you to seeking assistance with their federal income taxes. During your meeting with the Townsons, you gather the following information: They are both 55 years of age. They have two daughters and one son. One daughter (age 25) is married with children. One daughter (age 20) is living at home and attending college. Their son (age 16)...

Subjects