Palagraph Styles Section II- Answer 2 of 4 Questions 1.) Why do portfolio managers need to worry about changing utility functions? What is the life cycle theory of changing utility preferences? How can a portfolio managers use this theory as a management tool? 2.) Why are benchmark portfolios important? Assume you run a growth and income mutual fund with a target split of 50 percent high-grade bonds and 50 percent value stocks. Describe the type of benchmark portfolio you would use. How would you use it? Font Paragraph Styles 3.) What does global investing mean? What are the benefits and costs of global investing? Do you believe that global investing, on net, is a good strategy? Why? o 4.) What is a margin account? Assume a margin requirement of 40 percent. You are interested in Stock A. Stock A is currently selling for $50.00 per share, but you think its appropriate value is $40.00. Should you employ the margin account? Why or why not? Assume you do employ your margin account. How much money needs to be allocated to the account? Now say that the stock price moves to $55.00 per share and for other reasons you need to liquidate your position. Ignoring transactions costs, what is the rate of return that you earned