A defined benefit pension fund with benefit obligations that have an average duration of 10 years. The benefits are inflation protected.

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Assignment Solutions, Case study Answer sheets Project Report and Thesis contact [email protected] www.mbacasestudyanswers.com ARAVIND – 09901366442 – 09902787224 Investments Q1. What is the least risky asset for each of the following investors? a. A person investing for her 3­year­old child’s college tuition. b. A defined benefit pension fund with benefit obligations that have an average duration of 10 years. The benefits are not inflation protected. c. A defined benefit pension fund with benefit obligations that have an average duration of 10 years. The benefits are inflation protected. Q2. How might the incentive fee of a hedge fund affect the manager’s proclivity to take on high-risk assets in the portfolio? Q3. Conventional wisdom says that one should measure a manager’s investment performance over an entire market cycle. What arguments support this convention? What arguments contradict It? Q4. The ABC Corporation has a profit margin on sales below the industry average, yet its ROA is above the industry average. What does this imply about its asset turnover? Q5. Why do bond prices go down when interest rates go up? Don’t lenders like high interest rates? Q6. Search the internet for a recent graph of market volatility. What does this history suggest about the history of consumption growth? Q7. If the APT is to be a useful theory, the number of systematic factors in the economy must be small. Why? Q8. If the offering price of an open-end fund is Rs. 12.30 per share and the fund is sold with a front­end load of 5%, what is its net asset value? Assignment Solutions, Case study Answer sheets Project Report and Thesis contact [email protected] www.mbacasestudyanswers.com ARAVIND – 09901366442 – 09902787224

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Assignment Solutions, Case study Answer sheets Project Report and Thesis contact [email protected] www.mbacasestudyanswers.com ARAVIND – 09901366442 – 09902787224 Investments Q1. What is the least risky asset for each of the following investors? a. A person investing for her 3­year­old child’s college tuition. b. A defined benefit pension fund with benefit obligations that have an average duration of 10 years. The benefits are not inflation protected. c. A defined benefit pension fund with benefit obligations that have an average duration of 10 years. The benefits are inflation protected. Q2. How might the incentive fee of a hedge fund affect the manager’s proclivity to take on high-risk assets in the portfolio? Q3. Conventional wisdom says that one should measure a manager’s investment performance over an entire market cycle. What arguments support this convention? What arguments contradict It? Q4. The ABC Corporation has a profit margin on sales below the industry average, yet its ROA is above the industry average. What does this imply about its asset turnover? Q5. Why do bond prices go down when interest rates go up? Don’t lenders like high interest rates? Q6. Search the internet for a recent graph of market volatility. What does this history suggest about the history of consumption growth? Q7. If the APT is to be a useful theory, the number of systematic factors in the economy must be small. Why? Q8. If the offering price of an open-end fund is Rs. 12.30 per share and the fund is sold with a front­end load of 5%, what is its net asset value? Assignment Solutions, Case study Answer sheets Project Report and Thesis contact [email protected] www.mbacasestudyanswers.com ARAVIND – 09901366442 – 09902787224

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