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please answer as much as possible and I will give you a like!!! thankyou Question 3 17 marks a. The investment manager of Henry Securities
please answer as much as possible and I will give you a like!!! thankyou
Question 3 17 marks a. The investment manager of Henry Securities quoted: GC Pharma has a very high beta since its stock has traded as high as $158 and as low as its current $67 during this year.' Do you agree with the investment manager? Explain. (5 marks) b. Kenny currently has $10 million invested in a bond fund which has an expected return of 6% and a standard deviation of 15%. His daughter, Mona, recommends him to consider changing to invest 30% of the $10 million in a stock fund and the remainder in the bond fund. The stock fund has an expected return of 14% and a standard deviation of 30%. The correlation between the fund returns is 0.01. Should Kenny follow Mona's recommendation? Explain with calculations. (8 marks) c. You manage a mutual fund with an expected return of 16% and a standard deviation of 25%. The T-bill rate is 3%. Suppose your client decides to invest in your mutual fund a proportion (y) of his total investment budget so that his overall portfolio will have a standard deviation of 12%. i. What is the proportion y? (2 marks) ii. What is the expected return of your client's portfolio? (2 marks)Step by Step Solution
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