Investment Management Homework. 5 questions- answer FULLY, assignment help
DON’T PLAGARIZE, I’m well capable of googling answers myself, I am looking for original ideas.
IMPORTANT NOTE: The questions must be address in its full context. These questions are an opportunity to go outside the box to demonstrate your analytical, integrative, problem- solving and critical thinking skills using the knowledge acquired in your readings. As a result, it is very important to pay close attention to the questions and be able to conduct your discussions in the context of your question. – Please keep this in mind when you complete this assignment.
You must expand your ideas further. Analysis must be deep and very instructive.
ANSWER THE FOLLOWING QUESTIONS. Each question should be answered in at least 300 words. Quality of content and use of course and outside-of-course resources to support your position or analysis. The answers should not be in the form of essay, just straight to the point- Work must be original and cite your sources.
Please be sure to answer the question completely but specifically in well-written complete sentences.
1. Suppose the value of the S&P 500 Stock Index is currently $1,200. If the one-year T-bill rate is 3% and the expected dividend yield on the S&P 500 is 2%, what should be the one-year maturity futures price be? What if the T-bill rate is less than the dividend yield, for example, 1%?
2. a. A single stock futures contract on a non dividend -paying stock with current price $150 has a maturity of one year. If the T-bill rate is 3%, what should the future price be?
b. What should the futures price be if the maturity of the contract is three years?
c. What if the interest rate is 5% and the maturity of the contract is three years?
3. The finance committee of an endowment has decided to shift part of its investment in an index fund to one of two professionally managed portfolios. Upon examination of past performance, a committee member proposes to choose the portfolio that achieved a greater alpha value.
a. Do you agree? Why or why not?
b. Could a positive alpha be associated with inferior performance? Explain.
4. During a particular year, the T-bill rate was 6%, the market return was 14%, and a portfolio manager with beta of .5 realized a return of 10%. Evaluate the manager based on the portfolio alpha.
5. “In the course of this term we have learned about the concept of “risk” in many forms. You are faced with developing your own investment strategy and must manage as many risks as you can, while maintaining a reasonable goal strategy for your future net worth. Assume the following: 1)all of your current lifestyle expenses are met by your household earnings now and until retirement; 2)disregard the impact of taxes for these purposes; 3)the available investment money is a combination of employee qualified plans and/or individual accounts and is adequate but not unlimited; 4)the economy represented by current growth, inflation rates, interest rates, etc. will cycle normally without significant international, political, monetary or terrorist occurrences.
a. Rank the following types of risk in increasing order of importance to you at your current age/life expectancy and explain why:
• Purchasing power:
• Re-investment rate:
• Interest rate:
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