Question
In: Finance
Your client is willing to invest in Mutual funds industry to keep its portfolio diversified. Therefore...
Your client is willing to invest in Mutual funds industry to keep its portfolio diversified. Therefore he wants your advice in respect to which fund is better option for his risk level positions. He is risk averse investors and required high liquidity which enables him to meet day to day operations. You have gathered the data from Mutual funds and its allocation which are mentioned below:-
|
Fund A |
Fund B |
Fund C |
|
|
Cash & Cash Equivalents |
30.00% |
5.00% |
20.00% |
|
Equity |
40.00% |
70.00% |
60.00% |
|
Bonds |
30.00% |
25.00% |
20.00% |
|
Total |
100.00% |
100.00% |
100.00% |
|
Portfolio Return |
18.00% |
25.00% |
20.00% |
|
Benchmark Index Return |
15.00% |
20.00% |
22.00% |
|
Risk Free Rate of Return |
7.50% |
7.50% |
7.50% |
|
Portfolio Risk (Variance) |
1.50% |
6.00% |
4.50% |
|
Tracking error |
5% |
12% |
10% |
|
Covariance with Market |
0.1425 |
0.2567 |
0.1555 |
|
Variance of Market |
0.5752 |
0.1426 |
0.1825 |
Use above information to measure the different ratios for mutual funds evaluation.
- Sharpe Ratio
- Jensen’s Alpha
- Information Ratio
Recommend which fund is best suitable to clients risk and return profile.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
As an individual investor, you are attempting to invest in a well- diversified portfolio of mutual...
As an individual investor, you are attempting to invest in a
well- diversified portfolio of mutual funds so that you will be
somewhat insulated from any type of economic shock that may
occur.
a. An investment adviser recommends that you buy four different
U.S. growth stock funds. Since these funds contain over 400
different U.S. stocks, the adviser says that you will be well
insulated from any economic shocks. Do you agree? Explain.
Consider this statement: "Most people can't afford to invest in a diversified portfolio. Therefore, the idea...
Consider this statement: "Most people can't afford to invest in
a diversified portfolio. Therefore, the idea that we should only
analyze securities in a "portfolio" context is not right." What do
you think?
Your assignment is to develop an investment portfolio of common stocks and mutual funds for a...
Your assignment is to develop an investment portfolio of common
stocks and mutual funds for a person of your age (32) and current
life situation(unemployed student) You are
required to select 5
individual stocks and 5 mutual funds. You must
justify your selections by doing some research and indicating why
you chose the stocks and mutual funds in your portfolio. You will
need to put a hypothetical $10,000 into each stock and each mutual
fund. You will be tracking the...
Your assignment is to develop an investment portfolio of common stocks and mutual funds for a...
Your assignment is to develop an investment portfolio of common
stocks and mutual funds for a person of your age and current life
situation. You are required to select 5 individual stocks and 5
mutual funds. You must justify your selections by doing some
research and indicating why you chose the stocks and mutual funds
in your portfolio. You will need to put a hypothetical $10,000 into
each stock and each mutual fund. You will be tracking the price
changes...
Your assignment is to develop an investment portfolio of common stocks and mutual funds for a...
Your assignment is to develop an investment portfolio of common
stocks and mutual funds for a person of your age (32) and current
life situation(unemployed student USA) You are required to select 5
individual stocks and 5 mutual funds. You must justify your
selections by doing some research and indicating why you chose the
stocks and mutual funds in your portfolio. You will need to put a
hypothetical $10,000 into each stock and each mutual fund. You will
be tracking...
John has his portfolio invested in a diversified mutual fund portfolio. Recently, his portfolio (which is...
John has his portfolio invested in a diversified mutual fund
portfolio. Recently, his portfolio (which is up 9% per year
annually for the past 10 years), has dropped almost 15%. What type
of risk is John’s portfolio exposed to?
Idiosyncratic Risk
Behavioral Risk
Systematic Risk
Industry Risk
Lenny, after studying the income statement & cash flow
statement of four technology companies, decides that his best
option for the long term is T Mobile stock. What type of analysis
did Lenny...
Suppose you have to develop a portfolio for your client, what factors you will keep in...
Suppose you have to develop a portfolio for your client, what
factors you will keep in mind while developing that portfolio.
Discuss in the light of separation property. assume risk and other
factor at your own
You are a portfolio manager. There are 6 different funds you can invest in for your...
You are a portfolio manager. There are 6 different funds you
can invest in for your client. Each of the 4 scenarios are equally
likely to occur.
Fund
Scenario 1
Scenario 2
Scenario 3
Scenario 4
A
22.61
26.6
6.54
-3.36
B
15.12
18.48
10.6
5.08
C
19.69
17.91
5.99
-2.11
D
14.03
11.2
-1.99
6.68
E
7.62
7.92
9.26
3.75
F
6.52
13.27
15.05
14.22
Your client wants an annual return no less than 4%. All
scenarios are equally...
what stocks.would be needed to create a relatively diversified pirtfolio. mutual funds,etfs,and index funds should be...
what stocks.would be needed to create a relatively
diversified pirtfolio. mutual funds,etfs,and index funds should be
excluded. justify your choiced
You are to invest $100,000 for a client. Because the funds are to be invested in...
You are to invest $100,000 for a client. Because the funds are
to be invested in business(es) at the end of one year, you have
been instructed to plan for a one-year holding period. Further,
your boss has restricted you to the following investment
alternatives shown with their probabilities and associated
outcomes.
Returns On Alternative
Investments
Estimated Rate Of
Return
State of
??
T-
Alta
Repo
Am.
Market
2-Stock
Economy
Prob.
Bills Inds Men...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- choose one of the developmental theories (phychosexual-freud, psychosocial-eirkson, cognitive-piaget, or moral development-kohlberg) and exlain when and...
- 1. Why do some people resist the goal of becoming world class? How can this resistance...
- ATestforPrimalityisthefollowing: Given an integer n > 1, to test whether n is prime check to see...
- I have extra columns with data showing up in my pivot table. How can I get...
- In your own words, discuss The Fourth Amendment. How are new areas of technology impacted by...
- Elsa is a data analytics intern at a financial firm. Her company has obtained their customers...
- 30% 3) Calculate the fraction of total 2,3,4,5-tetrachlorophenol (organic acid) that is present in the water...
ADVERTISEMENT