+ 1. Among the five ETFs, which ETF do you expect to make the highest profit...
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+ 1. Among the five ETFs, which ETF do you expect to make the highest profit on average? Exchange Traded Fund Name Ticker Expected Expected Return Volatility Correlation* (Annualized) (Annualized) Domestic Equity ETF HOME 8.5% 18% Emerging Markets Equity ETF GROW 13.0% 30% High Domestic Debt ETF BOND 4.5% 8% Low Global Commodities ETF< MINE< 6.0% 16% Low Money Market ETF MMKT 2.0% 1% None *Quantitative values for the correlations between each of the assets are specifically omitted and not expected to be used in this simulation. Qualitative correlations provided are with respect to domestic equities.< H 2. Would you invest 100% in the ETF answered in Question 1? If not, why? ( 3. How would you advise your friend to allocate $500,000 among the five ETFs to achieve the goal?< ( 4. Calculate the expected annual return of two diversified portfolios Exchange Traded Fund Name< Equal Weight Portfolio Equal Weight Portfolio excluding MMKT e Expected Return (Annualized) 2 Reference: Portfolio annual expected return (multi-period)< N [1 + E(R₂)]* = Σ w;[1 + E(R;)]t ← i=1 ← ← 2 2 2 2 0 N t E(R₂) = ¹ Σw;[1 + E(R;)]t −1ª i=1 Wi = Portfolio weight allocated to asset i E(R₂) = Expected annual return of asset i E(R₂) = Expected annual return of portfolio t = Investment period in years + 1. Among the five ETFs, which ETF do you expect to make the highest profit on average? Exchange Traded Fund Name Ticker Expected Expected Return Volatility Correlation* (Annualized) (Annualized) Domestic Equity ETF HOME 8.5% 18% Emerging Markets Equity ETF GROW 13.0% 30% High Domestic Debt ETF BOND 4.5% 8% Low Global Commodities ETF< MINE< 6.0% 16% Low Money Market ETF MMKT 2.0% 1% None *Quantitative values for the correlations between each of the assets are specifically omitted and not expected to be used in this simulation. Qualitative correlations provided are with respect to domestic equities.< H 2. Would you invest 100% in the ETF answered in Question 1? If not, why? ( 3. How would you advise your friend to allocate $500,000 among the five ETFs to achieve the goal?< ( 4. Calculate the expected annual return of two diversified portfolios Exchange Traded Fund Name< Equal Weight Portfolio Equal Weight Portfolio excluding MMKT e Expected Return (Annualized) 2 Reference: Portfolio annual expected return (multi-period)< N [1 + E(R₂)]* = Σ w;[1 + E(R;)]t ← i=1 ← ← 2 2 2 2 0 N t E(R₂) = ¹ Σw;[1 + E(R;)]t −1ª i=1 Wi = Portfolio weight allocated to asset i E(R₂) = Expected annual return of asset i E(R₂) = Expected annual return of portfolio t = Investment period in years
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Related Book For
The Economics Of The Environment
ISBN: 9780321321664
1st Edition
Authors: Peter Berck, Gloria Helfand
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