You are considering investing in one of several mutual funds. All the funds under considerat various combinations of front-end and back-end loads and/or 12b-1 fees. The longer you pl in the fund you choose, the more likely you will prefer a fund with a __________ rather than ( everything else equal. a) 12b-1 fee; back-end load b) front-end load; 12b-1 fee c) 12b-1 fee; front-end load d) front-end load; back-end load e) 12b-1 fee; no load charge
Q: Investment Option "North" This potential investment is a little more risky and longer term, so it…
A: Net present value is the sum of present values of all cash flows associated with a project. This is…
Q: Mullet Technologies is considering whether or not to refund a $75 million, 13% coupon, 30-year bond…
A: Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or…
Q: TABLE 2.3 Personal tax rates for 2021 (Unmarried Individuals) Taxable Income Tax Rate $ 0–9,950…
A: Taxable Income = $187,200
Q: A person wants to open a small business and according to his investment project he requires…
A: Deposits are made to accumulate money for the future but these deposits attract interest over the…
Q: YearRisk-free ReturnMarket ReturnWyatt Oil…
A: The comparison of price movement between a stock and market return is known as beta. It is…
Q: Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so…
A: Ratio analysis is a technique used to evaluate the financial performance and health of a company by…
Q: Compare and contrast different project evaluation methods, including net present value (NPV),…
A: Project evaluation methods like Net Present Value (NPV), Internal Rate of Return (IRR), and Payback…
Q: loan of X is repaid with level annual payments at the end of each year for 10 years. You are given:…
A: Loans are paid by equal annual payments and these annual payments carry the payment for the loan and…
Q: Bond ABCD Maturity 2 8 2 Liquidity High High Low 8 Low Based on the table above, what is the default…
A: Default risk premium risk refers to the compansatory payment, incase of default of the borrower in…
Q: You are the CFO of a manufacturing company that is considering an investment in new production…
A: Capital budgeting is a method of determining the profitability and feasibility of projects. This…
Q: company has a $36 million equity portfolio with a beta of 0.9. The futures price on the S&P index…
A: Number of contracts = Value of portfolio * (Targeted beta- existing beta) / (Lot size* value of…
Q: Discuss the relationship and differences of functions between the following associations in the USA:…
A: The Financial Planning Association (FPA) and the Financial Planning Standards Board (FPSB) are two…
Q: Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year in recent years.…
A: The dividend discount model refers to the method of calculation of the stock price as it considers…
Q: One year ago, your company purchased a machine used in manufacturing for $100,000. You have learned…
A: The total present value of cash inflows and outflows is known as net present value, or NPV. To put…
Q: Describe the role of a financial analyst in a financial institution such as a bank or investment…
A: A financial analyst is a professional who assesses financial data, conducts research and provides…
Q: (b) Consider two 20 years bond with annual coupon payments. Bond A has 8 percent coupon rate and…
A: (b)i. Calculation of the price of the bonds: ii. Since the price of Bond A is higher than the face…
Q: The price today of a 4-year coupon bond with annual coupons, a coupon rate of 6%, and a face value…
A: A bond is a kind of debt security issued by the government and private companies to the public for…
Q: mpany has developed a new mobile app that has the potential to disrupt the market. The company is…
A: Equity finance is finance through shares and shares represent ownership in the company based on the…
Q: Find the expected EUAW from the financial data provided in the table for new equipment. Because of…
A: EUAW is the Equivalent Uniform Annual Worth. It means how much annually would be the cost of the…
Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…
A: The expected return of the portfolio refers to the average profit provided by the portfolio to its…
Q: Suppose there is a mutual fund and each consumer buys a share in it for her endowment at t = 0. The…
A: A mutual fund is a professionally managed investment vehicle that pools money from multiple…
Q: Old School is trying to decide whether it should purchase or lease a new high-speed photocopier…
A: Alternative-1 BuyingYearsCash Flows0$14,0001$7502$7503$7504$7505$7506$7506($1,000)Alternative-2…
Q: What is the outstanding balance on the January 25th invoice after the January 27th payment?
A: First let us define the trade terms.3/10 n/30 means 3% discount if the payment is made within 10 day…
Q: re projected to grow by 25 percent. Interest expense will remain constant; t id the dividend payout…
A: External funding required is the amount of finance needed in the form of debt or equity to increase…
Q: A company has a debt-to-equity ratio of 1.5. Which of the following statements is true? The…
A: Company raises money through debt and equity and hence total capital consists of debt and equity and…
Q: Consider an event study of the following stock. Realised return Market return t = 0 (event day)…
A: Investors can use abnormal returns to monitor the performance of a single asset or a portfolio of…
Q: Nabor Industries is considering going public but is unsure of a fair offering price for the company.…
A: Here, Constant Growth Rate after 5 years3%Average Cost of Capital13%Market Value of Debt $…
Q: ingon Widgets, Incorporated, purchased new cloaking machinery three years ago for $4.4 million. The…
A: Working capital can be found as the difference between current assets and current liabilities and it…
Q: If a project costs $74,000 and will earn $24,000 per year for the next four years, and has a…
A: Capital budgeting techniques are financial methods and tools used by organizations to evaluate and…
Q: Carla Lopez deposits $3,000 a year into her retirement account. If these funds have an average…
A: Annual deposit = $3,000Interest rate = 5%Number of years = 50Value of the retirement account is the…
Q: How to complete the personal balance and calculate the net worth?
A: Calculation of Net worth and Personal balance.
Q: Nataro, Inc., has sales of $662,000, costs of $335,000, depreciation expense of $80,000, interest…
A: Variables given in the question:Sales = $662,000Costs = $335,000 Depreciation expense =…
Q: As of Dec 01, 2020, Pfizer announced that the Federal Drug Administration has approved its new…
A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…
Q: Two mutually exclusive investment projects have the following forecasted cash flows: Year 0 1 2 3 4…
A: Internal rate of return (IRR) is the rate at which present value of cash inflows will be equal to…
Q: healthcare organization is planning to invest in new technology to improve patient care and…
A: Company need money for growth that may be raised through debt and may be raised through equity that…
Q: The payback period method has been criticized for not taking the time value of money into account.…
A: Payback period method:Payback period: This is the simplest and most widely employed traditional…
Q: A client has the following obligations: $20,000 maturing in 2 years with interest at 5%…
A: To analyze the client's obligations and determine whether it's possible to replace the debts…
Q: An investor is aiming to buy 400,000 shares of the stock shown on the order book below. Al orders…
A: When an investor is buying shares, in that case, sales order (offers) will be considered.Buy…
Q: Consider a firm with an EBITDA of $16,800,000 and an EBIT of $12,400,000. The firm finances its…
A: EBIT = $12,400,000 Numberof shares outstanding = 11,900,000 Debt = $53,800,000Interest rate =…
Q: need $20,000 five years from now. The account pays 9% compounded annually. If you will receive…
A: Present value is the equivalent value today of the future cash flow based on the time and interest…
Q: common stock currently outstanding. a. Calculate Everdeen's 2019 earnings per share (EPS). b. If the…
A: Profit before tax = $477,000Tax = 21%Preference dividends = $64,100Shares outstanding =…
Q: person owes a credit institution $20,000 that must be paid in 3 years with interest at 12% effective…
A: A person owes a credit institution $20,000 and must be paid in 3 years at 12% effective rate and…
Q: A mining company is considering a new project. Because the mine has received a permit, the project…
A: NPV takes into consideration the idea that the opportunity to earn returns on investments makes…
Q: Gordon is about to start a project requiring GHC6 million of initial investment. The company…
A: Gordon is about to start a project requiring GHC6 million of initial investment. The company borrows…
Q: An Exchange Traded Fund (ETF) is a security that represents a portfolio of individual stocks.…
A: Here,StockCurrent Market PriceNo. of SharesHPQ$252SHLD$442GE$114
Q: A two-year amortizing bond has a coupon rate of 4% and pays its coupons semiannually. Coupon…
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: Enercio contributes $123,200 in exchange for a 40% interest in the calendar year ABC LLC, which is…
A: Variables in the question:Enercio interest in ABC LLC=40%Ordinary taxable income of ABC LLC=$98560
Q: Which of the following factors is most likely to affect the level of systematic risk in a portfolio?…
A: Systematic risk-It is a risk that is impossible to completely avoid as the risk is inherent to the…
Q: You are bullish on Telecom stock. The current market price is $110 per share, and you have $22,000…
A: Current Market Price = $110Owned Funds = $22,000Borrowed Funds = $22.000Total Initial Investment =…
Q: James bought a new hot tub today from Situation Hot Tubs. What is the present value of the cash…
A: Present value is calculated by following formula:-P = F ÷ (1+r)nWhere,P = Present valueF = future…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Assume the risk-free rate is 4%. You are a financial advisor, and must choose one of the funds below to recommend to each of your clients. Whichever fund you recommend, your clients will then combine it with risk-free borrowing and lending depending on their desired level of risk. Expected Return Volatility Fund A 7% 3% Fund B 10% 4% Fund C 9% 4% Which fund would you recommend without knowing your client's risk preference?If you wish to purchase a mutual fund with low annual fees you should collect information on the of the various funds. O a) MER O b) P/E c) EPS O d) beta3. Consider an individual who has the possibility of investing an amount t in period 1 in a fund that gives an amount s in period 2. (a) If the interest rate r is positive, what would be the smallest s so that it is optimal for the consumer to accept that investment? (b) If t = 100 and s = 115, what is the highest interest rate at which the individual is willing to invest in that fund?
- Suppose that a mutual fund agent approaches you and promote a fund which allows you to withdraw money from your Employment Provident Fund (EPF) to invest. From the analysis of the agent, the fund expected to pay up to 11% return, and you know that EPF paid an average 6% return and treasury’s return fixed at 2.75%. Based on the discussion in this chapter and in your opinion, are you going to take the investment? Justify your answerSolve the problems listed below. Show your solution and box the final answer. (bond or yellow paper) 1. A fund is set up to charge a load. Its net asset value is P16.50 and its offer price is P17.30. A. How much is the commission of the load? B. What percentage of the offer price does the commission represent? C. What percentage of the net asset value does the commission represent? D. Assume the fund increased in value by .30 the first month after you purchased 100 shares. What is the total gain or loss? Compare the total current value with the total purchase amount. E. By what percentage would the net asset value of the shares have to increase for you to break even? 2. Under peso-cost averaging, an investor will purchase P6,000 worth of stock each year for three years. The stock price is P40 in year 1, P30 in year 2 and P48 in year 3. A. What is the share purchased in every year? B. Compute the average price per share. C. Compute the average cost per share. 3. Under peso-cost…Q1. What is a mutual fund? In what sense is it a financial institution?. Q2. How is the net asset value (NAV) of a mutual fund determined? What is meant by the term marked-to-market daily? Q3. An investor purchases a mutual fund for $50. The fund pays dividends of $1.50, distributes a capital gain $2, and charges a fee of $2 when the fund is sold on year for $52.50. What is the net rate of return from this insurance? Formula for Question 3: Net gain = Dividend + capital gain + profit from fund sold – fee
- Using Yahoo Finance, find two different mutual funds (such as a growth fund, a growth and income fund, a sector fund, or a bond fund). Compare the funds based on their size, management, risk level, and dividend distributions. Then, determine which of the two funds would be more appropriate.As an individual investor, you have three funds to invest into. The first is an equity fund, the second is a corporate bond fund, and the third is a T-bill money-market fund (your risk-free asset). Fund Expected rate of return Risk (Standard deviation) Equity fund 16% 32% Corporate bond fund 12% 18% T-bill money market fund 2% Correlation between equity fund and bond fund returns is 0.4. Find the Expected return of the minimum variance portfolio formed from Equity and Bond fundsA pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 4%. The characteristics of the risky funds are as follows: Stock fund (S) Exp. Return Bond fund (B) 0.43 15% O 1.00 0.70 11% The correlation between the fund returns is 0.2. Solve numerically for the Sharpe Ratio of the optimal risky portfolio. 0.66 Std. Deviation 0.85 26% 12%
- 1. Suppose there is a mutual fund and each consumer buys | a share in it for her endowment at t = 0. The mutual fund maximises the wealth of its shareholders when choosing IF, the investment in the long term technology. At t =1, the mutual fund pays dividend d to each of its shareholders. At t = 1, the shares can be traded at price p*. a. Set up the mutual fund's optimisation problem and derive and interpret the first order condition. What happens when R increases and why? b. What is the optimal consumption profile cf , c and the optimal investment IF? | c. Calculate (i.e. derive an expression for) d and p. 2. Now suppose there is no financial intermediary to handle liquidity shocks. However, at t = 1 a market for bonds opens up and agents can trade their wealth at t = 1 for | wealth at t 2. Each bond pays 1 at t = 2 and its price is pM. Calculate the consumer's optimal investment decision IM at t = 0 , the price of the bond pM, and the optimal consumption in the two states cM, cM. 3.…You are considering purchasing a no - load mutual fund with an operating expense of .4% and a 12 b-1 expense of .25% . You are also considering purchasing a CD paying 3.0% per year. What minimum annual rate of return must the fund earn to make you better off in the fund versus the CD Group of answer choices 3.65 % 3.0 % 2.35% 3.4%Required information [The following information applies to the questions displayed below.] A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Stock fund (S) Bond fund (B) The correlation between the fund returns is 0.25 . Required: What is the expected return and standard deviation for the minimum-variance portfolio of the two risky funds? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected Return Correct, Standard Deviation Incorrect Required: Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. (Do not round intermediate calculations and round your final answers to 2 decimal places.) Required: What is the Sharpe ratio of the best feasible…