FIN6406 Assignment 1

Question # 49991	Writing	5 months ago

$4

5 months ago

caliv74525

Assignment 1

Problem 1: The following two figures illustrate historical home price trend and interest rate for the 30-years fixed rate mortgage in the United States. Based on the information, please answer the following questions if today were in 2013.

1. Assuming that history will repeat itself, what do you think of the U.S. housing market for the next 10 years? How about mortgage rate for the next 10 years?

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2. Based on your prediction, answer the two questions below:

a)If you have money, should you invest in the housing market?

b)If your answer in a) is “Yes”, and one lender allows you to borrow money, should you borrow money to buy the property? Why?

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Problem 2:

Catherine Wood, CEO & CIO, ARK Innovation Investment

•In 2020, Cathie Wood was regarded as one of the most talented investment managers in the industry. This is no surprise: ARKK Innovation ETF returned a whopping 153% in 2020 alone, over three times more than the Nasdaq 100’s already impressive 48%.

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•As of 12/14/2021, the year to date (YTD) return for ARKK Innovation ETF was down 24.96%, while the Nasdaq 100’s had a YTD return of up 23.48%.

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During the interview with Matthew Fox on Dec 9, 2021*, Cathie Wood defends her beaten-down portfolio and estimates Ark fund's returns will quadruple in the next 5 years, and she explained,

"We have seen such a correction, primarily in innovation stocks as the market scaled to all time highs, that based on our estimates, our 5-year compound annual rate of return expectation has gone from 15% at the peak in March, to nearly 40% today”

*https://markets.businessinsider.com/news/stocks/cathie-wood-defends-arks-investment-strategy-expects...