Houston Metals Inc. has a small pension fund that is managed by a professional portfolio manager. All of the fund's assets are invested in corporate equities. Last year, the portfolio manager realized a rate of return of 12%. The risk-free rate was 7% and the market risk premium was 3%. The portfolio's beta was 1.1. a. Compute the portfolio's alpha. Do not round intermediate calculations. Round your answer to one decimal place. % b. What does the portfolio's alpha imply about the manager's performance last year? The portfolio manager -Select- the market on a risk adjusted basis. Consolidated Industries is planning to operate for 10 more years and then cease operations. At that time in 10 years), it expects to have the following pension benefit obligations: Year 11-15 16-20 21-25 26-30 31-35 Annual Total Payment $3,070,000 2,570,000 2,070,000 1,570,000 1,070,000 The current value of the firm's pension fund is $5.5 million. Assume that all cash flows occur at year-end. a. Consolidated's expected return on pension assets is 6%, and it uses 6% to discount the expected pension benefit payments. What is the present value of the firm's pension fund benefits? Do not round intermediate calculations. Round your answer to the nearest dollar. $ b. Is the plan underfunded or overfunded? Do not round intermediate calculations. Round your answer to two decimal places. Funding ratio = The plan is -Select- Houston Metals Inc. has a small pension fund that is managed by a professional portfolio manager. All of the fund's assets are invested in corporate equities. Last year, the portfolio manager realized a rate of return of 12%. The risk-free rate was 7% and the market risk premium was 3%. The portfolio's beta was 1.1. a. Compute the portfolio's alpha. Do not round intermediate calculations. Round your answer to one decimal place. % b. What does the portfolio's alpha imply about the manager's performance last year? The portfolio manager -Select- the market on a risk adjusted basis. Consolidated Industries is planning to operate for 10 more years and then cease operations. At that time in 10 years), it expects to have the following pension benefit obligations: Year 11-15 16-20 21-25 26-30 31-35 Annual Total Payment $3,070,000 2,570,000 2,070,000 1,570,000 1,070,000 The current value of the firm's pension fund is $5.5 million. Assume that all cash flows occur at year-end. a. Consolidated's expected return on pension assets is 6%, and it uses 6% to discount the expected pension benefit payments. What is the present value of the firm's pension fund benefits? Do not round intermediate calculations. Round your answer to the nearest dollar. $ b. Is the plan underfunded or overfunded? Do not round intermediate calculations. Round your answer to two decimal places. Funding ratio = The plan is -Select
