Exam 13: Managing Your Own Portfolio

A portfolio has a total return of 14.4%, a standard deviation of 18.5% and a beta of 1.43.The risk free rate is 2.5%, the market rate of return is 11.4%, and the market's Treynor measure is 6.3.What is the value of the Treynor measure of this portfolio?

Juan's investment portfolio was valued at $125,640 at the beginning of the year.During the year, Juan received $603 in interest income and $298 in dividend income.Juan also sold shares of stock and realized $1,459 in capital gains.Juan's portfolio is valued at $142,608 at the end of the year.All income and realized gains were reinvested.No funds were contributed or withdrawn during the year.What is the amount of income Juan must declare this year for income tax purposes?

Tatiana is following a fixed weighting approach to managing her portfolio, which on January 1 consisted of 45% common stock, 40% bonds, and 15% short-term securities.Because stocks had a good year, at the end of the year, it consisted of 55% common stock, 35% bonds and 10% short-term securities.As a result,

A rational investor will require the same return from a corporate security as from a government security.

Portfolio revision is the ongoing process of systematically studying the issues in the portfolio and selling certain issues and purchasing others as the means of maintaining a portfolio that best meets the investor's objectives.

Ten years ago, Taylor purchased 444.44 shares in a mutual fund for $22.50 per share.He has never made an additional investment in this fund, but because of reinvested dividends and capital gains, he now owns 1,200 shares with a net asset value of $25.88 per share.Ignoring taxes, his compound average annual rate of return (IRR)is

The calculation of returns on options and futures must consider income as well as capital gains.

On January 1, Stacy's portfolio was valued at $96,534.During the year Stacy received $3,285 in interest and $4,100 in dividends.She also sold one stock at a gain of $850.The value of the portfolio on December 31 of the same year was $113,201.At the end of June, Stacy withdrew $5,000 from the portfolio.What is the holding period return for the year?

Explain the use of limit orders and stop-loss orders in rebalancing an investor's stock portfolio.What are the principal risks in using these orders?

A Jensen measure of 2.5% means that a security earned 2.5% more than the overall market.

Formula plans are high-risk investment strategies that attempt to benefit from cyclical price movements.

Suppose the shares of the Chickadee Corporation traded seven times in the following sequence one day last week: 46, 45.88, 45.75, 45.50, 45.63, 46, 46.13.In this case, a limit order to sell at 46 would have been executed

Jordan invests 10% of his money in each of the 10 mutual funds available in his 401-K plan.This tendency is known as the 1/N heuristic.

The holding period return measures only the capital appreciation of an investment.

One year ago, Matt bought 100 shares of ACE Corp.stock for $5,619 including commission.He is about to sell the ACE stock for $6,528 net of commissions.When he made the purchase the S&P 500 index was at 907; now it is 1070.The beta of ACE stock is 0.98, and the market's risk-free rate is 4.0%.No dividends were paid.Based on Jensen's measure, did Matt make a good purchase?

Marti is 31 years old and is saving for retirement.Which one of the following portfolio allocations might best suit her situation if she is willing to accept a fair amount of risk in exchange for long-term capital appreciation?

Which of the following is ideally suited to automatic investing through a payroll deduction plan?

Allison's portfolio has an expected return of 14% and a standard deviation of 20%.Brianna's portfolio has an expected rate of return of 11% and a standard deviation of 12%.The risk-free rate is 3%.According to the Sharpe measure,

The general theory of dollar cost averaging is

Investors need to monitor economic and market activity to assess the potential impact these factors can have on their investment portfolios.