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Go to the iShares website at, and look up information about the stock index




1. Go to the iShares website at, and look up information about the stock index funds listed in the table.;a. Complete the table.;Yield: use the 30-day SEC yield.;Ticker Style Market cap Yield P/E P/B 10-year return standard deviation top two sectors held;IWD value large;IWS value medium;IWN value small;IWB core large;IWR core medium;IWM core small;IWF growth large;IWP growth medium;IWO growth small;b. Comparing the different styles of value, core, and growth, is the information you have gathered consistent with what we?ve learned in the chapter regarding the following? Explain each answer.;? dividend yield?;? P/E ratio?;? sector weightings?;c. Which investment style, if any, has the best 10-year return? Which market capitalization, if any, has the best 10-year return? Would you use this information to make predictions for the future?;d. Comment on the risk of the funds in regard to their market capitalization.;2. Go to the Wall Street Journal website at and get a quote for ticker symbol LGVAX. This is a actively-managed stock fund that invests in large-cap stocks. (Legg Mason Capital Management Value Fund);a. Identify the name of the fund?s benchmark index.;b. Identify the fund?s 3-year annualized return, and the benchmark index?s 3-year annualized return. Using that information, determine the fund manager?s active return. Show work.;c. Comment on the advantages and disadvantages of an actively-managed fund versus a passive index fund.;3. Suppose that you want to create your own equity portfolio that is based on the S&P 500 index but uses only the 100 stocks from the index that you think will do the best.;a. Would you describe this approach as passive, active, or semi-active? Explain.;b. What stock characteristics might you analyze in order to determine which 100 of the 500 stocks to include? Explain.;c. Would you use a bottom-up or a top-down strategy to make your picks? Explain.;d. Explain how an equity portfolio such as this should help protect you from inflation.;e. Suppose that instead of picking the stocks that you think will do the best, you divide the 500 stocks in the index into ten categories based on industry and market capitalization, and choose a random group of stocks from each category to be in your index. What is the name of this method?;4. The Dow Jones Industrial Average is a price weighted index. Two stocks in this index include Chevron (CVX) and General Electric (GE). On a certain date in 2012, the price of CVX was $96.41 while the price of GE was $18.54. Both of these companies have a market capitalization of approximately $190 billion.;a. Suppose that the next day, CVX increases $0.96 (1%) to $97.37, GE increases $0.74 (4%) to $19.28, and all other components of the Dow don?t change. Which will contribute a greater change to the value of the Dow index, the 1% change in CVX, or the 4% change in GE. Explain.;b. How would your answer change if the Dow were a value weighted index?


Paper#25713 | Written in 18-Jul-2015

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