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Five years ago beginning October 1, 2016 and ending September 30, 2021 you invested $1,000 in something and discussed it beforehand with your spouse/partner. Consider
- Five years ago beginning October 1, 2016 and ending September 30, 2021 you invested $1,000 in something and discussed it beforehand with your spouse/partner. Consider two scenarios: a) you invested in Invesco S&P SmallCap Energy ETF and the fund did poorly and b) you didnt invest in Bitcoin and it did well. In both scenarios, your spouse/partner now claims to have told you to do the opposite of what you did.
- Compute the following for the security/commodity during the 5 years (only ii should be on an after tax basis): 20 pts.
- Rate of return before taxes
- Rate of return after federal/state/local New York City taxes (assume youre in the 22% federal income tax bracket.
- Volatility
- Beta
- Sharpe measure
- Jensen alpha.
- Compute the following for the security/commodity during the 5 years (only ii should be on an after tax basis): 20 pts.
- Re-compute each figure above for both the security and your equity investment if you instead only invested $500 of your own cash and borrowed on margin an additional $500 to invest in the security at an average 5% interest rate over the five years? Note: figures for equity investment may differ from those for the security itself. 10 pts.
No numericals were given.
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