A JOB AT EAST COAST YACHTS
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Question 1
The mutual funds are more advantageous that the companies stocks. The mutual stocks have a low level of risk as compared to the stocks. The mutual funds offer divergent options. These options include the dividend payout, growth and dividend reinvestment, (Kirk, 2011). The mutual funds offer vivid assessment tool for the returns as compared to the companies Stocks. The manager can assess the benchmark and the overall returns. The pricing of the mutual fund is based on the prices of the underlying securities. The mutual fund indicates the number of assets in the portfolio.
Question 2
According to the analysis, both the APR and EAR are infinite. The annual percentage rate is used in the banks for the lending of money to borrowers. The rate is expected to be lower than effective annual rate, (Kirk, 2011). The effective annual rate is the interest rate that the banks pay the interests to the deposit accounts. These include the effects of the intra-year compounding. The match of the two rates will make it instantaneous. The numeral of phases in the year will be infinite.
Question 3
The choice of the Bledsoe Large company stock fund as compared to the Bledsoe S and P 500 Index fund will lead to the following predicaments. The small company stocks can easily outperform the market stock levels. The advantage of the largest company stock is the reduced level of risk. This means as the stock grows the earnings and sales increases with the changes for the new markets. The small company will have an increased potential to enter into the new markets. This increases the chance of growth in the funds. The large company stocks are affected by the reduced level for the overall growth of the dynamics and the overall opportunity for the risks, (Kirk, 2011). The small company funds are actively managed as compared to the large company.
The disadvantage for the large company stock is a low performance. This means that the stock of a small company can outperform the large company stocks. The mutual funds of the different corporations have low potential to outperform the market. The largest issue that controls the growth of the stock is the increased management fee that is charged for the organization.
Question 4
The volatility of the small capital funds is high as compared to the large company stock. The presentation that the charges in the stock are high does not mean that the small cap stocks are bad. The level of the stock is considered as the riskiest. This makes it possible for the obtaining high rates for the expected returns or losses. The high risk will assure the provision of the highest return for the organization, (Nick, 2008). The investment of the fund assures the risk tolerance to be offering the additional risk in the expectations of the high returns. The expectation of high return will lead to the desire of investing in the small capital fund.
The highest expenses will be expected due to the high expenses that are presented in the funds. The funds will be required to be noticed for the assessment of the decision. The noticing of the fund assures the highest expense to assess the decision for the fund.
Question 5
The risk free rate is 3.2 %. The calculation of the Sharps ratio is as follows.
| Bledsoe S and P 500 directory Fund | = (9.18% – 3.2) / 20.43% | = .2927 |
| East Coast Yachts Stock | = (16% – 3.2) / 65% | = .1969 |
| Bledsoe Bond Fund | = (6.45% – 3.2) / 9.85% | = .3299 |
| Bledsoe Small-Cap Fund | = (14.12% – 3.2) / 24.83% | = .4345 |
| Bledsoe Large Company Stock Fund | = (8.58% – 3.2) / 23.83% | = .2259 |
The ratio is applicable in the analysis of the diversified portfolio. The reward to variability is assessed through the measurement of the mean return to units of the risk for an investment asset through the trading strategy, (Nick, 2008). The ratio allows the analysis of the returns on the assets that allow the compensation for the investors that are risk stricken. The uses of Sharpe ratio are based on the providence of the benchmarking levels for the different stocks. This assesses the returns through the same risk analysis.
Question 6
The portfolio allocation will be based on the overall risk tolerance. The Sharpe ratio allows the portfolio allocation in the following arrangement, (Nick, 2008). Bledsoe Small-Cap Fund, Bledsoe Bond Fund, Bledsoe S and P 500 Index Fund, Bledsoe big Company Stock Fund and East Coast Yachts Stock will be the last in the arrangement. The choice of the Bledsoe Small-Cap Fund is based, on the overall opportunity, to obtain the highest return. The other reason is the risk tolerance level for the investment loss. The portfolio allocation will be based on the weighted stocks. The possible management analysis will help in the identification of the employees face layoffs through the reduced work hours. This is will be the manner of the portfolio allocation.
Reference
Kirk, A. (2011). The Risk and Opportunity of Homeostatic Repopulation: Taylor and Francis Publication: International Journal on Transplantation, 11, 7, 1349-1350
Nick, W. (2008). Risk organization and Board efficacy: Elsevier Publication: International Studies on Management and association, 38, 3, 43-70
