Question

You just received a windfall of $500,000, but you can't spend it for 10 years. What...

You just received a windfall of $500,000, but you can't spend it for 10 years. What will your asset allocation be? (stocks, bonds, mutual funds, real estate, CD's)? What is your risk profile?

Homework Answers

Answer #1

Since i cant spend it for 10 years, i can lock the funds in illiquid assets like real estate.

I am investor with moderate risk taking appetite, in the sense that i am not a risk averse investor but at the same time i don't like taking too much of risks.  So, i would prefer investing my money in Bonds and Commercial deposits  and mutual funds which are professionally managed by Fund houses which can earn me decent profits without taking too much of risks.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You have just received a windfall from an investment you made in a​ friend's business. She...
You have just received a windfall from an investment you made in a​ friend's business. She will be paying you $ 18,811 at the end of this​ year, $37,622 at the end of next​ year, and $56,433 at the end of the year after that​ (three years from​ today). The interest rate is 8.8% per year. a. What is the present value of your​ windfall? b. What is the future value of your windfall in three years​ (on the date...
You have just received a windfall from an investment you made in a​ friend's business. She...
You have just received a windfall from an investment you made in a​ friend's business. She will be paying you $29,980 at the end of this​ year, $59,960 at the end of next​year, and $89,940 at the end of the year after that​ (three years from​ today). The interest rate is 13.6% per year. a. What is the present value of your​ windfall? b. What is the future value of your windfall in three years​ (on the date of the...
You have just received a windfall from an investment you made in a​ friend's business. She...
You have just received a windfall from an investment you made in a​ friend's business. She will be paying you $49,124 at the end of this​ year, $98,248 at the end of next​ year, and $147,372 at the end of the year after that​ (three years from​ today). The interest rate is 9.5% per year. a. What is the present value of your​ windfall? b. What is the future value of your windfall in three years​ (on the date of...
You have just received a windfall from an investment you made in a friend's business. He...
You have just received a windfall from an investment you made in a friend's business. He will be paying you $10,000 at the end of this year, 20,000 at the end of the following year, 30,000 at the end of the year after that, 5,000 at the end of year 4, and 10,000 at the end of year 5. You require a 6% rate of return on your investment. Calculate the present value of this windfall. (Round to 3 decimals)
19. The year is 2006. You are the manager of a university endowment and are combining...
19. The year is 2006. You are the manager of a university endowment and are combining stocks, bonds, and real estate funds. Your mandate is to find the optimal portfolio that has an expected return of 8% per year. What optimization problem would you try to solve? Minimize risk for an expected portfolio return of 8% per year Maximize expected return for a volatility target of 8% per year None of these Maximize the Sharpe ratio with no constraints Not...
You form the following investment portfolio: $200,000 of portfolio in REITs, 10% annual return $500,000 in...
You form the following investment portfolio: $200,000 of portfolio in REITs, 10% annual return $500,000 in stocks, 8% annual return $300,000 in bonds, 4% annual return If the standard deviation of returns in your portfolio is 5%, what is your coefficient of variation (i.e. risk to return ratio)? Round your answer to two decimal places.
A financial analyst has recently argued that portfolio managers who rely on asset allocation techniques spend...
A financial analyst has recently argued that portfolio managers who rely on asset allocation techniques spend too much time trying to estimate expected returns on different classes of securities and not enough time on estimating the correlations between their returns. The correlations are important, he argues, because a change in correlation, even with no change in expected returns, can lead to changes in the optimal portfolio. In particular, he argues that as the correlation between stock and bond returns ranges...
In practice, 99% of people are confused about how they should allocate their regular retirement contributions...
In practice, 99% of people are confused about how they should allocate their regular retirement contributions among various funds available to them in their 401(k) accounts (or similar accounts). The 'menu' of available funds is often bewildering: stocks, bonds, real estate, commodities, money markets, international, and on and on. In your opinion, how should a typical investor approach this allocation problem? What should be his/her guiding principles. How did you solve this problem (or are going to solve this problem...
In practice, 99% of people are confused about how they should allocate their regular retirement contributions...
In practice, 99% of people are confused about how they should allocate their regular retirement contributions among various funds available to them in their 401(k) accounts (or similar accounts). The 'menu' of available funds is often bewildering: stocks, bonds, real estate, commodities, money markets, international, and on and on. In your opinion, how should a typical investor approach this allocation problem? What should be his/her guiding principles. How did you solve this problem (or are going to solve this problem...
You have just won the lottery and will receive $500,000 in one year. You will receive...
You have just won the lottery and will receive $500,000 in one year. You will receive payments for 22 years, which will increase 4 percent per year. The appropriate discount rate is 10 percent. Required: What is the present value of your winnings? Multiple Choice $5,907,208 $5,670,920 $20,290,274 $20,290,274
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT