Lesson #6, Assignment #2 - Chapter 12 A Job at...

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Unformatted text preview: Chapter 12 A Job at S&S Air Input area: 10-year annual return Standard deviation Bledsoe S&P 500 Index Fund 11.48% 15.82% Bledsoe Small-Cap Fund 16.68% 19.64% Bledsoe Large Company Stock Fund 11.85% 15.41% Bledsoe Bond Fund 9.67% 10.83% Company stock expected return 18.00% Company stock standard deviation 70.00% Question 1: What advantages do the mutual funds offer compared to company stock? Question 5: Risk-free rate The biggest advantage the mutual funds have is instant diversification. The mutual funds have a number of assets in the portfolio. Question 2: Assume that you invest 5% of your salary and receive the full 5% match from S&S Air. What EAR do you earn from the match? What conclusions do you draw about matching plans? Both the APR and EAR are infinite. The match is instantaneous, so the number of periods in a year is infinite. Question 3: Assume you decide you should invest at least part of your money in large-capitalization stocks of companies based in the United States. What are the advantages and disadvantages of choosing the Bledsoe companies based in the United States....
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This note was uploaded on 04/29/2011 for the course FINANCE BA521 taught by Professor Mark during the Spring '11 term at Antelope Valley College.

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Lesson #6, Assignment #2 - Chapter 12 A Job at...

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