A pension fund manager is considering three funds. The first is a stock fund, the second is a bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.0%. The probability distributions of the risky funds are: Expected Return Standard Deviation
Stock funds (S) 16% 20%
Bond funds (B) 8% 10%
The correlation coefficient between the fund returns is 0.15.
a. You invest 50% in the stock fund and 50% in the bond fund. What is your expected return and standard deviation?
b. Use the formula from the Formula Sheet on Canvas (also available below) to compute the optimal risky portfolio (ORP) weights. What is the Sharpe ratio of the best CAL? You manage $1000 for your client and your client wants an expected return of 10%. How much money do you invest in each of the three funds?

Select the correct answer. ramon applied to the state university in the city where he lives, but he was denied admission. what should he do now? a.change his mind about graduating and drop out of high school so he can start working right away. b. decide not to go to college, because he didn’t have a backup plan. c.stay positive and write a mean letter to let the college know that they made a bad decision. d. learn from this opportunity, reevaluate his options, and apply to his second and third choices.

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?

Storico co. just paid a dividend of $3.15 per share. the company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. if the required return on the company’s stock is 12 percent, what will a share of stock sell for today?