Case, Canada Pension

Case, Canada Pension - Key behaviors: o Maximize expected...

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Case: Canada Pension Plan Alternatives: o Stay in bonds o Invest in equities (take on more risk) o Increase contributions rates Returns: o (End Price – Beg. Price)/ Beg. Price o Avg. return (1926 – 1998): Large company stocks, 13.2% Corporate bonds, 6.16% Govt./ treasury bonds, 5.70% Treasury bills, 3.82% Measurement of risk: o Range (max – min) o Standard deviation: Appropriate measure for portfolios Not for individual stocks Fundamental principle of finance: o Investors are risk-averse
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Unformatted text preview: Key behaviors: o Maximize expected returns o Minimize risk o Markowitz Nobel Prize Now look at individual securities: o Minimum: Woolworth, -.3% a month o Maximum: Primerica, 4.5% a month o Average of all 30 stocks: 1.55% a month o 90 98: Phenomenally good time period for stocks Dot Com Bubble Stocks return more than bonds, but theyre riskier (historically) Market timing: o Is now the right time to go into equities?...
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This note was uploaded on 06/11/2011 for the course BUSI 408 taught by Professor Croce during the Spring '08 term at UNC.

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Case, Canada Pension - Key behaviors: o Maximize expected...

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