A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the thirdis a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows:StandardDeviationStock fund (S)Bond fund (B)30%15The correlation between the fund returns is 0.10.You require that your portfolio yield an expected return of 14%, and that it be efficient, that is, on the steepest feasible CAL.Required:a. What is the standard deviation of your portfolio?b. What is the proportion invested in the money market fund and each of the two risky funds?ExpectedReturn20%12Complete this question by entering your answers in the tabs below.Required AMoney market fundStocksBondsRequired BWhat is the proportion invested in the money market fund and each of the two risky funds?Note: Round your answers to 2 decimal places.ProportionInvested%%< Required ARequired 8 >

The portfolio is the combination of different securities. These securities include stocks, bonds,…

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows: Standard Deviation Stock fund (S) Bond fund (B) 30% 15 The correlation between the fund returns is 0.10. You require that your portfolio yield an expected return of 14%, and that it be efficient, that is, on the steepest feasible CAL. Expected Return 20% 12 Required: a. What is the standard deviation of your portfolio? b. What is the proportion invested in the money market fund and each of the two risky funds? Complete this question by entering your answers in the tabs below. Required A Required B What is the proportion invested in the money market fund and each of the two risky funds? Note: Round your answers to 2 decimal places. Money market fund Stocks Bonds Proportion Invested % % % < Required A Required 8 >

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows: Standard Deviation Stock fund (S) Bond fund (B) 30% 15 The correlation between the fund returns is 0.10. You require that your portfolio yield an expected return of 14%, and that it be efficient, that is, on the steepest feasible CAL. Expected Return 20% 12 Required: a. What is the standard deviation of your portfolio? b. What is the proportion invested in the money market fund and each of the two risky funds? Complete this question by entering your answers in the tabs below. Required A Required B What is the proportion invested in the money market fund and each of the two risky funds? Note: Round your answers to 2 decimal places. Money market fund Stocks Bonds Proportion Invested % % % < Required A Required 8 >

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 2FPE

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