Pielago has another excess fund amounting to P5,000,000. She is having difficulty whether to invest it in debt or in equity securities. List down the pros and cons of investing in each security to help her decide wisely.
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- 7. Nancy is considering investing in an individual variable insurance contract (IVIC) and she is researching the product features of various companies. In particular, she is interested in the kinds of fees and charges that a plan might levy on the funds in which she intends to invest. She has heard about frontend load funds, back-end load funds and no-load funds. She intends to invest $25,000 as a single sum in a non-registered IVIC and keep the investment in the plan for at least 10 years. Based on her intentions, what type of fees and charges should she consider? (A) The front-end load will charge her an annual fee on her deposit of 1% to 2%. (B) The back-end load will levy a charge on any withdrawals of 5% at any time she makes her withdrawal, (C) A no-load fund will allow her investment to grow without any charges levied against it. (D) Fees or chargeN of some kind will diminish the investment returns on any of these plan types.Viden, a financial advisor for high-net-worth individuals, is examining the portfolio of a client who has requested to reduce the risk of his portfolio which is currently populated only with stocks. The client needs an investment with regular cash flows to finance his daughter’s 4-year university education, as well as a short term fund to meet unexpected requirements in cash. (a) Determine what are the best asset classes to meet his needs, and discuss the reasons for your choice. (b) What will happen to the systematic risk of the client’s portfolio after the change?Anita is looking forward to her retirement which is only five years away. Her retirement account did not accumulate as much as she had hoped. She decided to make some changes in her financial planning. Based on this information, which of the following statements is correct? a. At this stage, Anita should rebalance her funds in a way that maximizes her investment in growth stocks to accelerate her fund balance. b. At this stage, Anita should focus on preserving what she has accumulated and minimize all debt obligations. c. At this stage, Anita should plan on extending her career, going on a diet, moving in with her children, and eliminating all recreational activities. d. At this stage, Anita should borrow as much as possible and plan on making the payments with her social security earnings.
- Nick is nearing retirement and is looking to purchase a mutual fund that will provide a relatively safe investment as well as regular income payments. Among mutual funds with an income objective, Nick can either buy shares in which invest in CDs, government securities, and short-term obligations issued by corporations, or he can invest in for a slightly higher current income return and the potential for capital appreciation as well. Within the category of bond funds are even more specific options. Nick decides to buy shares in a fund that invests in Treasury issues maturing in more than ten years, known as bonds. He is also collecting income from shares he already owns in a fund, a type of fund that invests in securities issued by agencies such as Fannie Mae and Freddie Mac Growth Objective Karen is a 32-year-old woman with two children who owns her own home and has a substantial retirement account. She recently received an inheritance from her uncle and is looking to invest in a…Juan is a small-business owner. He has some cash flow and wants to invest in a new project. Juan's assistant provides an evaluation and estimates the nominal returns that Juan would earn if he invests in the project. Juan reads the evaluation and makes the decision based on the real terms after factoring in inflation. Good Financial Decision? Yes No Joe is an average investor. His financial advisor gave him options of investing in a company's stock A, with a o of 12%, and stock B, with a o of 9%. Both stocks have the same expected return of 16%. Joe can pick only one stock and decides to invest in stock A. Good Financial Decision? Yes NoArray intends to allocate her savings into various types of financial investments. She has $184,100 to invest in stocks, bonds, and mutual funds according to her chosen 10 2 10 ratio 779 investment? Round your answers to the nearest dollar. Stocks: $ Bonds: $ respectively. How much should she invest in each type of Mutual Funds: $
- Anita is looking forward to her retirement which is only five years away. Her retirement account did not accumulate as much as she had hoped. She decided to make some changes in her financial planning. Based on this information, which of the following statements is correct? At this stage, Anita should rebalance her funds in a way that maximizes her investment in growth stocks to accelerate her fund balance. At this stage, Anita should focus on preserving what she has accumulated and minimize all debt obligations. At this stage, Anita should borrow as much as possible and plan on making the payments with her social security earnings. At this stage, Anita should plan on extending her career, going on a diet, moving in with her children, and eliminating all recreational activities.Suppose you are 28 and married. You and your spouse file for income taxes jointly. You are in the 25% tax bracket. You are considering a few personal investment issues. While insurance is an effective way to protect against undesirable risk, it is by no means the only way. There exist many other tools for personal risk management. Cash reserve is one such example. By keeping cash reserve, you self-insure against unexpected future loss. Compared with self-insurance using cash reserve, buying insurance has both pros and cons. The biggest pro is mortality pooling—more efficient to manage risk on the group level than on the individual level. The biggest con is the high price of insurance policy. The high insurance premium results not just from an insurance company’s costs of producing the insurance but also from the high costs to market it (e.g.,commissions paid to insurance agents) and the additional costs caused the prevalent adverse selection and moral hazard problems in the…Suppose you are 28 and married. You and your spouse file for income taxes jointly. You are in the 25% tax bracket. You are considering a few personal investment issues. Suppose you believe that the security market is at efficient in the semi-strong form. You are considering buying some mutual fund shares in your investment accounts. Which of the following statements is correct? a. Actively managed funds are good choices because they may consistently beat the market, they are tax efficient and have lower expenses. b. Actively managed funds are not good choices because they cannot consistentlybeat the market although they are tax efficient and have lower expenses. c. Index funds are not good choices because they are not tax efficient, their management fees are higher although actively managed funds cannot consistently beat the market. d. Index funds are good choices because they are tax efficient and have lower expenses and because actively managed funds cannot consistently beat the…
- Bhavika Investments, a group of financial advi-sors and retirement planners, has been requested to provide advice on how to invest $200,000 forone of its clients. The client has stipulated thatthe money must be put into either a stock fund ora money market fund and the annual return shouldbe at least $14,000. Other conditions related to riskhave also been specified, and the following linear program was developed to help with this invest-ment decision: Minimize risk = 12S + 5Msubject toS + M = 200,000 total investment is$200,000 0.10S + 0.05M Ú 14,000 return must be at least $14,000 M Ú 40,000 at least 40,000 must bein money market fund S, M Ú 0whereS = dollars invested in stock fundM = dollars invested in money market fundThe QM for Windows output is shown below.(a) How much money should be invested in themoney market fund and the stock fund? What isthe total risk?(b) What is the total return? What rate of return isthis?(c) Would the solution change if the risk measurefor each dollar…Array intends to allocate her savings into various types of financial investments. She has $191,000 to invest in stocks, bonds, and mutual funds according to her chosen 13 8 1 ratio : 14 34 respectively. How much should she invest in each type of investment? Round your answers to the nearest dollar. Stocks: $ Bonds: $ Mutual Funds: $Assume that your uncle gave you $50,000 to invest solely in mutual funds. Based on your point in the life cycle and your investment philosophy, identify your investment goals and explain how you would spread your money among different funds. Include the funds you would invest in, the amounts you would invest and explain why you selected these funds.