Blair & Rosen, Inc. (B&R) is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients.A client who contacted B&R this past week has a maximum of $55,000 to invest. B&R's investment advisor decides to recommend a portfolioconsisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 11%, and the BlueChip fund has a projected annual return of 7%. The investment advisor requires that at most $25,000 of the client's funds should be invested inthe Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the twoinvestment alternatives, has a risk rating of 6 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand dollarsinvested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 6(10) + 4(10) -100. Finally, B&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as aconservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B&Rrecommends that a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 230. (d) Suppose that a third client with $55,000 to invest has been classified as a conservative investor. B&R recommends that the maximumportfolio risk rating for a conservative investor is 170. Develop the recommended investment portfolio for the conservative investor. If anamount is zero, enter "0".Internet FundsBlue Chip FundsAnnual Return = $

Owning stocks, bonds, or other financial assets with the hope that they will generate income,…

(d) Suppose that a third client with $55,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 170. Develop the recommended investment portfolio for the conservative investor. If an amount is zero, enter "0". Internet Funds Blue Chip Funds Annual Returns

(d) Suppose that a third client with $55,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 170. Develop the recommended investment portfolio for the conservative investor. If an amount is zero, enter "0". Internet Funds Blue Chip Funds Annual Returns

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter2: Fundamental Economic Concepts

Section: Chapter Questions

Problem 6E

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