1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
s2008m [1.1K]
3 years ago
8

An 85-year old risk averse investor is not happy about the minimal return she is earning on her current investments. She is stre

ssed about having enough income because her cost of living has been increasing by more than 10% annually. Her current portfolio composition consists of:
Business
1 answer:
NikAS [45]3 years ago
4 0

An 85-year old risk averse investor is not happy about the minimal return she is earning on her current investments. She is stressed about having enough income because her cost of living has been increasing by more than 10% annually. Her current portfolio composition consists of:

40% Money Market Fund

50% Bonds

10% Equities

What changes should you suggest to her portfolio?

A. Reduce the Money Market Fund allocation by 10% (to 30%) and put the released funds in commodities such as gold

B. Reduce the Money Market Fund allocation by 30% (to 10%) and put the released funds in AAA-rated corporate bonds

C. Liquidate the entire Money Market Fund allocation and put the released funds in Equities, bringing that allocation up to 50%

D. Liquidate the entire Money Market Fund allocation and put the released funds in U.S. Treasury securities

Answer:

Reduce the Money Market Fund allocation by 30% (to 10%) and put the released funds in AAA-rated corporate bonds

Explanation:

Given that AAA rated bonds are considered to be the highest possible rating that may be assigned to an issuer's bonds by any of the major credit rating agencies, with the smallest risk of default.

Hence, given the situation above with the 85 years old woman, the changes to make to her portfolio is to Reduce the Money Market Fund allocation by 30% (to 10%) and put the released funds in AAA-rated corporate bonds

You might be interested in
You will receive $5,000 a year in real terms for the next 5 years. Each payment will be received at the end of the period with t
photoshop1234 [79]

Answer:

$20,229.5

Explanation:

Given:

Amount to be received = $5,000

Time period, n = 5 years

nominal discount rate = 10.725%

inflation rate = 3 percent

Now,

Using the Fischer's relation, we have

1 + Nominal rate = ( 1 + Real rate ) × ( 1 + Inflation )

on substituting the values, we get

( 1 + 10.725% ) = ( 1 + Real rate ) × ( 1 + 3% )

or

1.10725 = ( 1 + Real rate ) × 1.03

or

( 1 + Real rate ) = 1.075

or

Real rate = 1.075 - 1 = 0.075 or 7.5%

Thus,

Present Value of an ordinary annuity that makes $5000 every year payment for 5 years will be calculates as:

Present value = Monthly payment × [\frac{(1-(1+r^{-n})}{r}]

or

Present value =5000\times[\frac{1 - (1 + 0.075)^{-5}}{0.075}]

or

Present value = 5000 × 4.0459

or

Present value = $20,229.5

3 0
3 years ago
Jit is a ______________ system.<br> a. push<br> b. pareto's law<br> c. mrp<br> d. pull
olga55 [171]
D maybe hope this helps

5 0
3 years ago
Hot Topic LLC appeals to tweens and teens through their Gothic frocks, fad movie gear, piercing paraphernalia, and popular t-shi
GarryVolchara [31]

Answer:

The answer is A) target market.

Explanation:

A target market is a group of consumers or organizations most likely to buy a company's products or services.

6 0
3 years ago
How does inflation hurt your savings?
siniylev [52]

Answer:

have to spend more money

Explanation:

4 0
2 years ago
Georgia's gross pay was 35,600 this year she is to pay a federal income tax of 16% how much should georgia pay in federal income
OverLord2011 [107]

To determine the tax amount you multiply the gross pay and the tax percentage. In this case, you would multiply $35,600 by .16 which equals $5,696 for the federal tax year. Remember: to convert a percentage to a decimal number, move the decimal place 2 places to the left.

6 0
3 years ago
Read 2 more answers
Other questions:
  • When employees perceive that the process for decision-making is unfair or that the distribution of resources is unfair, they are
    8·1 answer
  • A dairy producer has determined that almost all grocery consumers are potential customers for its products. Which type of market
    10·1 answer
  • Suppose you learn that your friend is serving flank steak at her​ party; all-you-can eat and at no charge. Flank steak is your f
    10·1 answer
  • 1. Problems and Applications Q1 Suppose the demand for classical music concert tickets is downward sloping and the supply of cla
    13·1 answer
  • Define debt economics.​
    9·1 answer
  • CBA Company reported total stockholders' equity of $76,000 on its balance sheet dated December 31, 2018. During the year ended D
    11·1 answer
  • Pina Colada Corp. issued 22000 shares of $1 par common stock for $40 per share during 2022. The company paid dividends of $53000
    5·1 answer
  • Two managers in the research and development department of a company disagree on whether their organization should outsource dev
    13·1 answer
  • If a company has advance ticket sales totaling 2,000,000 for the uncomping football season. the reciept of cash would be journal
    11·1 answer
  • one of the ten principles of economics is that a country's standard of living depends on its ability to produce goods and servic
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!