Questions from General Investment

Q: For the stock in Problem 13, what is the smallest expected

For the stock in Problem 13, what is the smallest expected gain over the next year with a probability of 1 percent? Does this number make sense? What does this tell you about stock return distribution...

Q: You are constructing a portfolio of two assets, asset A and

You are constructing a portfolio of two assets, asset A and asset B. The expected returns of the assets are 12 percent and 15 percent, respectively. The standard deviations of the assets are 29 percen...

Q: Calculate Jensen’s alpha for the fund, as well as its information

Calculate Jensen’s alpha for the fund, as well as its information ratio. Data for Problem 19: You have been given the following return information for a mutual fund, the market ind...

Q: Margin Call (LO2, CFA2) Suppose the initial margin on

Margin Call (LO2, CFA2) Suppose the initial margin on heating oil futures is $8,400, the maintenance margin is $7,200 per contract, and you establish a long position of 10 contracts today, where each...

Q: You are long 10 gold futures contracts, established at an initial

You are long 10 gold futures contracts, established at an initial settle price of $1,500 per ounce, where each contract represents 100 troy ounces. Your initial margin to establish the position is $12...

Q: You are short 15 gasoline futures contracts, established at an initial

You are short 15 gasoline futures contracts, established at an initial settle price of $2.085 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position i...

Q: You have been assigned to implement a three-month hedge for

You have been assigned to implement a three-month hedge for a stock mutual fund portfolio that primarily invests in medium-sized companies. The mutual fund has a beta of 1.15 measured relative to the...

Q: A non-dividend-paying stock is currently priced at $

A non-dividend-paying stock is currently priced at $48.15 per share. A futures contract maturing in five months has a price of $48.56 and the risk-free rate is 4 percent. Describe how you could make a...

Q: Is it true that the NAV of a money market mutual fund

Is it true that the NAV of a money market mutual fund never changes? How is this possible?

Q: A stock is currently priced at $53.87 and the

A stock is currently priced at $53.87 and the futures on the stock that expire in six months have a price of $55.94. The risk-free rate is 5 percent and the stock is not expected to pay a dividend. Is...