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
Sergio039 [100]
3 years ago
8

Returns and Actions Kunal Nayyar from London, had $60,000 in investments in the USA at the beginning of the year that consisted

of a diversified portfolio of stocks (40 percent), bonds (40 percent), and cash equivalents (20 percent). His returns over the past 12 months were 14 percent on stocks, 5 percent on bonds, and 1 percent on cash equivalents. What is Kunal's average return for the year? Round your answer to one decimal place. % If Kunal wanted to rebalance his portfolio to its original position, what specific actions should he take?
Business
1 answer:
AlekseyPX3 years ago
5 0

Answer:

Average rate of return is 7.8% , and total amount is $4,680

If Kunal wanted to rebalance his portfolio to its original position, he needs to transfer $672 (= $25,872 - $25,200) from stock account to bond account  and $816 ( = $12,936 - $12,120) from stock account to cash.

Explanation:

Total return for year = 14% * (40% of $60,000) + 5% * (40% of $60,000+ 1% *(20% of $60,000) = $4,680

Average rate of return = $4,680/ $60,000 = 7.8%

At beginning, the amount in per diversified portfolio is as below:

  • Amount invested in stock = 40% * $60,000 = $24,000
  • Amount invested in bond = 40% * $60,000 = $24,000
  • Amount in cash = 20% *$60,000 = $12,000

After receiving return, the amount in per diversified portfolio is as below:

Amount invested in stock = $24,000 *(1+14%) = $27,360

  • Amount invested in bond = $24,000 *(1+5%) = $25,200
  • Amount in cash = $12,000 * (1 + 1%) = $12,120

And amount in Kunal’s investment fund  = $27,360 + $25,200 + $12,120 = $64,680

 

If Kunal wanted to rebalance his portfolio to its original position, the amount in per diversified portfolio is as below:

Amount invested in stock = 40% * $64,680 = $25,872

  • Amount invested in bond = 40% * $64,680 = $25,872
  • Amount in cash = 20% *  $64,680 = $12,936

⇒ Kunal needs to transfer $672 (= $25,872 - $25,200) from stock account to bond account  and $816 ( = $12,936 - $12,120) from stock account to cash.

You might be interested in
What are tresholds in auditing?​
Greeley [361]

Answer:

:)

Explanation:

The materiality threshold in audits refers to the benchmark used to obtain reasonable assurance that an audit does not detect any material misstatement that can significantly impact the usability of financial statements.

5 0
3 years ago
3. Which one of the following statements is correct concerning the NYSE? a.) The publicly traded shares of a NYSE-listed firm mu
Gwar [14]

Answer:

c.) The listing requirements for the NYSE are more stringent than those of NASDAQ.  

Explanation:

The correct statement is c. NASDAQ and NYSE both is American stock exchange where share are traded. NYSE is world’s largest stock exchange in terms of market capitalization of listed companies and NASDAQ is second largest stock exchange. The listing requirements for NYSE are stringent and tough. A firm should have atleast $40 million market value of public shares to be listed on NYSE.

7 0
3 years ago
Read 2 more answers
An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimates, the value of Mandalays
den301095 [7]

Answer:

The stock is overrated because his intrincis value, 78.54 is below his market price 99.25

This means it is preferable to sale the share before their value drops.

Explanation:

Intrinsic Value 78.54

Market Value 99.25

6 0
3 years ago
The opportunity cost of earning an advanced college degree is that:
Mamont248 [21]
The answer would be B
7 0
3 years ago
Read 2 more answers
Modern economic growth has caused?.<br>​
Vinil7 [7]

Answer:

.increased capital

.increase in working population

6 0
3 years ago
Other questions:
  • 5. Which of the following examples of emotional behaviors are displayed by infants up to 8 months?
    15·2 answers
  • At the beginning of the current fiscal year, the balance sheet of Hughey Inc. showed stockholders' equity of $523,000. During th
    8·1 answer
  • FIFO and LIFO are two common methods used to compute the depreciation of tangible assets. True or false?
    15·1 answer
  • "Health care is so special that price will never matter. People will either buy what medical care they need, or else they will j
    15·1 answer
  • The reason for the multiplier effect is that a. businesses make decisions about investment projects based on anticipated profits
    15·1 answer
  • A company has a beginning inventory of​ $20,000 and purchases during the year of​ $140,000. The beginning inventory consisted of
    5·1 answer
  • Ted has 600 dollar a week to spend on clothing and food the price of clothing is 30 dollar and price of food 5 dollar .What is t
    12·1 answer
  • Purdue Company signed a one-year lease on April 1, 2017, and paid the $45,600 total yearâs rent in advance. Purdue recorded the
    9·1 answer
  • Petty Cash Fund Entries Journalize the entries to record the following: Check is issued to establish a petty cash fund of $1,200
    6·1 answer
  • The fundamental relationship between economic value creation and competitive advantage is?
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!