Hi,

I am struggling with my finance homework. If anyone could help me do questions 1-5 of the "A Job at S&S Air" minicase I would greatly appreciate it.

Thank you,

Johannah

1. What advantages do the mututal fnds offer compared to the company stock?

2. Assume that you invest 5 percent of your salary and receive the full 5 percent match from S&S Air. What EAR do you earn from the match? What conclusions do you draw about matching plans?

3. Assume you decide you should invest at least part of you rmoney in large-capitalization stocksin of companies based in the US. What are the advantages and disadvantages of choosing the Bledsoe Large Company Stock Fund compared to the Bledsoe S&P 500 Index Fund?

4. The returns on the Bledsoe Small Cap Fund are the most volatile of all the mutual funds offered in the 401K plan. Why would you ever want to invest in this fund? When you examine the expenses of the mutual funds, you will notice that this fund also has the highest expenses. Does this affect your decision to invest in this fund?

5. A measure of risk-adjusted performance that is often used is the Sharpe ratio. The Sharpe ratio is calculated as the risk premium of an asset divided by its standard deviation. The standard deviation and return of the funds over the past 10 years are listed in the following table. Calculate the Sharpe ratio for each of these funds. Assume that the expected return and standard deviation of the company stock will be 18 percent and 70 percent, respectively. Calculate the Sharpe ratio for the company stock. How appropriate is the Sharpe ratio for these assets? When would you use the Sharpe ratio?