Jake has $285,000 to invest. He chooses one money market fund that pays 6.5% and a mutual fund that has more risk but has averaged 17.0% per year. If his goal is to average 8.6% per year with minimal risk, how much should he invest in each fund? A- Jake should invest $____in the money market fund that pays 6.5% 9 (Simplfy your answer)
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Jake has $285,000 to invest. He chooses one
A- Jake should invest $____in the money market fund that pays 6.5% 9 (Simplfy your answer)
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- Investor Matt has $822,000 to invest in a CD and a mutual fund. The CD. yields 4.1% and the mutual fund yields an average of 7.4%. The mutual fund requires a minimum investment of $16,000, and Matt requires that at least 5 times as much money be invested in the CD as in the mutual fund. You must invest in order to maximize his return. WWhat is the maximum return? Enter 0 if no investment can be made satisfying the requirements. Round to the nearest cent. %24Suppose 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 answerAn investor has $80,000 to invest in Certificates of Deposit (CD) and a mutual fund. The CD yields 7% and the mutual fund yields 8%. The mutual fund requires a minimum investment of $8,000 and the investor requires at least twice as much should be invested in CDs as in the mutual fund. How much should be invested in each to maximize the return? What is the maximum return? Show your work and explanations setting this problem up. Variables should clearly be defined. Show all your work.
- Investor Matt has $661,000 to invest in a CD and a mutual fund. The CD yields 7.3% and the mutual fund yields an average of 7.7%. The mutual fund requires a minimum investment of $20,000, and Matt requires that at least 4 times as much money be invested in the CD as in the mutual fund. You must invest in order to maximize his return. What is the maximum return? Enter 0 if no investment can be made satisfying the requirements. $ . Round to the nearest cent.Suppose you have recently accepted a new job and are setting up your retirement allocations within the firm's 401k plan. The plan options contain two risky mutual funds, A and B. You may assume that all fees are the same across the two funds. Fund A has an expected return of 6% and the standard deviation of returns is 12%. Fund B has an expected return of 7% and the standard deviation of returns is 15%. The correlation between returns on the two funds is 0. The plan also contains a Treasury fund which provides a risk-free return of 3%. A Suppose you can only invest in one of the two risky mutual funds (A or B), but can combine it with the Treasury fund in any proportions you wish. Which of the two mutual funds would you choose and why B Maintaining the restrictions on your investment choices from the last question, what is the best expected return you could achieve if you set up a portfolio with a standard deviation of returns equal to 10%? (Please express your answer in percentage…As a wealthy individual investor, you are planning to invest your $2 million in a fund of funds which invests in 2 different hedge funds, namely hedge fund A and B. The incentive fees are 20% for all funds including the fund of funds. The incentive fee is applicable when a fund earns a positive return. Let’s assume that funds A and B generate 10% and -15% gross returns, respectively. Given the information above, please fill out the below table. You can copy and paste the table to the answer section and fill it out there. You may want to show your calculations in the space below the table. Fund A Fund B Fund of Funds Start of year (millions) $1.00 $1.00 $2.00 End of year (millions) $ $ $ Gross rate of return % % % Incentive fee (millions) $ $ $ End of year, net of fee $ $ $ Net rate of return % % %
- 40) You are considering investing in a no-load mutual fund with an annual expense ratio of 0.60% and an annual 12b-1 fee of 0.75%. You could also invest in a bank CD paying 6.50% per year. What minimum annual rate of return must the fund earn to make you better off in the fund than in the CD? A) 7.10% B) 7.45% C) 7.25% D) 7.85%Your friend offers you an investment opportunity. If you give him $1,200 today, his project will provide you with the following cash flows in Years 1-4: $100, $200, $600, $550. You required 10% return on investments of this risk level. Alternatively, you can invest your $1,200 in the money market fund at 4% today. Which of the two options is a better investment opportunity? Q4. There are two different ways to answers the question (both lead to the same conclusion). Show the complete formula (not the calculator shortcuts) with all the necessary terms that you would use to solve the problem as if you didn't have a financial calculator on hand. Q5. Circle the better investment opportunity: Friend's project / Money market fundYou 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%
- You are considering an investment in a mutual fund with a 4% load and an expense ratio of .5%. You can invest instead in a bank CD paying 6% interest.a. If you plan to invest for 2 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns.b. How does your answer change if you plan to invest for 6 years? Why does your answer change?c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of .75% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Does your answer in this case depend on your time horizon?Carefully define each variable and set up the appropriate system of equations to answer the problem below. (Do NOT solve the system.) Michael plans to invest $50,000 in three mutual funds: a money-market fund, a blue-chip stock fund, and a high-tech stock fund. His financial advisor estimates that the money-market fund will return 5% over the next year, the blue-chip fund 9%, and the high-tech fund 16%. Jason wants a total of first-year return of $4000. To avoid excessive risk, he decides to invest three times as much money in the money-market fund as in the high-tech stock fund. How much should he invest in each fund?Suppose you consider investing $1,000 in a load fund which charges a fee of 2%, and you expect the fund to earn 14% over the next year. Alternatively, you could invest in a no-load fund with similar risk that is expected to earn 9% and charges a 1/2 percent redemption fee. Which is better and by how much? a. Funds are equal b. Load fund by $32.65 c. Load fund by $50.55 d. No-load fund by $64.55 e. No-load fund by $44.30