1 SOM Deposit 7 (1) 8 9 5 banks offer nominal rates of 6%, but differ...

 

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1 SOM Deposit 7 (1) 8 9 5 banks offer nominal rates of 6%, but differ in their compounding frequency. A-annually; B-semiannually; C- quarterly; D-monthly; and E-daily. (1) EAR 20 21 22 23 24 17 18 03 19 25 26 27 28 29 30 31 32 33 34 35 36 37 6% $5,000 B 10 11 12 13 14 15 Q2 What is the real return on an investment that earns a nominal 15% return during a period of 6% Inflation? 16 () What nominal rate would cause all banks to provide same EAR as Bank A? A C D D NOM E E Assume that you manage a risk portfolio with an expected rate of return of 17%, and a standard deviation 27% The T-bill rate is 7% Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. a. What is the expected return in standard deviation of your clients portfolio? Suppose your risky portfolio includes the following investments in the given proportions: Stock A27% Stock B 33% Stock C40% b. What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio? c. Draw the CAL of your portfolio on an expected return/standard deviation diagram. 1 SOM Deposit 7 (1) 8 9 5 banks offer nominal rates of 6%, but differ in their compounding frequency. A-annually; B-semiannually; C- quarterly; D-monthly; and E-daily. (1) EAR 20 21 22 23 24 17 18 03 19 25 26 27 28 29 30 31 32 33 34 35 36 37 6% $5,000 B 10 11 12 13 14 15 Q2 What is the real return on an investment that earns a nominal 15% return during a period of 6% Inflation? 16 () What nominal rate would cause all banks to provide same EAR as Bank A? A C D D NOM E E Assume that you manage a risk portfolio with an expected rate of return of 17%, and a standard deviation 27% The T-bill rate is 7% Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. a. What is the expected return in standard deviation of your clients portfolio? Suppose your risky portfolio includes the following investments in the given proportions: Stock A27% Stock B 33% Stock C40% b. What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio? c. Draw the CAL of your portfolio on an expected return/standard deviation diagram.

Answer rating: 100% (QA)

a To calculate the expected return and standard deviation of your clients portfolio we can use the following formulas Expected Return Portfolio Expected Return Weight of Fund A Expected Return of Fund ... View the full answer