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- Four of the lines in the graph below show the value of $5,000 invested in each of the four individual companies. One of
the lines shows the value of a portfolio composed of $1,250 in each stock. Which line represents the portfolio?
ValueTimeA B C D EB. Asset AllocationUse the table of return expectations by asset class from this section to answer the following questions.- Suppose that a portfolio is invested 65% in equities, 25% in fi xed income, and 10% in cash. If we assume that each
asset class earns the low-end rate of return from the table in this section, what would we expect the overall portfolio’s
rate of return to be? What if each asset class earns the high-end rate of return? - Jayeth intends to invest $200 a month into an investment account for the next 30 years. He expects his account value
to grow to $700,000 in that time. If he allocates his investments 50% to stocks, 30% to fi xed income, and 20% to cash,
is this a reasonable expectation? Justify your answer. - If you invest in a portfolio of 45% equities, 30% fi xed income, and 25% cash, by what percent will your investment grow
in value over the next year? (Be careful in answering this one.) - Since equities have historically tended to provide a much higher rate of return than fi xed income or cash investments,
why doesn’t everyone put all investment money in the stock market?
C. Basic Mutual Fund Calculations- The Hopewell Diversifi ed Value Fund has total assets of $142,575,814. There are 3,475,912 shares outstanding. What
is the NAV per share? - The Hopewell International Equity Fund is a no-load open-end fund whose NAV is $42.66 per share. If Todd invests
$3,000 in this fund, how many shares will be created? - The Hopewell Emerging Markets Bond Fund is an open-end fund whose NAV is $103.59. The fund charges a 4.75%
load. If Brenna invests $2,500 in this fund, how many shares will she own?
Exercises 6.4 299