Question
1. Your client has a $500,000 portfolio and wants to use $20,000 to purchase a new car in 12 months but does not want to
1. Your client has a $500,000 portfolio and wants to use $20,000 to purchase a new car in 12 months but does not want to use any of the $500,000 for the purchase. Which asset, if you can only select one, would you advise your client to invest the portfolio? Assume the risk free-rate is 2%.
| Asset | Return | Std Dev |
| A | 5.0% | 10.0% |
| B | 10.0% | 5.0% |
| C | 1.0% | 50% |
| D | 5.0% | 7.0% |
| E | 15.0% | 5.0% |
| F | 2.0% | 3.0% |
| G | 3.0% | 4.0% |
| H | 3.0% | 15.0% |
| I | 8.0% | 20.0% |
2. Assume a price-weighted index has three stocks. Stock A has a price of $50, stock B a price of $40, and stock C a price of $6. Stock A has 5 shares, stock B has 10 shares, and stock C has 2 shares. What is the index value? Note that indices such as the Dow Jones Industrial Average are price-weighted.
a. $17
b. $32
c. $44
d. $96
e. $662
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QFinance The Ultimate Resource
Authors: Various Authors
1st Edition
1849300003, 978-1849300001
