d. Which of the portfolios in parts (b) and (c) would you recommend for an aggressive investor? I would recommend the portfolio in - Select your answer - + for an aggressive investor because it has a - Select your answer - Which would you recommend for a conservative investor? I would recommend the portfolio in Select your answer - + for a conservative investor because it has a - Select your answer -
d. Which of the portfolios in parts (b) and (c) would you recommend for an aggressive investor? I would recommend the portfolio in - Select your answer - + for an aggressive investor because it has a - Select your answer - Which would you recommend for a conservative investor? I would recommend the portfolio in Select your answer - + for a conservative investor because it has a - Select your answer -
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
only need part d
Transcribed Image Text:The Knowles/Armitage (KA) group at Merrill Lynch advises clients on how to create a diversified investment portfolio. One of the investment alternatives they make available to clients is the All World Fund composed of global stocks with good dividend yields. One of their clients is interested in a portfolio consisting of investment in the All World Fund and a treasury bond fund. The expected percent return of an investment in the All World Fund is **9.50%** with a standard deviation of **18.50%**. The expected percent return of an investment in a treasury bond fund is **5.00%** and the standard deviation is **4.40%**. The covariance of an investment in the All World Fund with an investment in a treasury bond fund is **-14.2**.
**a.** Which of the funds would be considered the more risky?
- Select your answer -
Why?
It has a - Select your answer -.
**b.** If KA recommends that the client invest **75%** in the All World Fund and **25%** in the treasury bond fund, what is the expected percent return and standard deviation for such a portfolio?
Expected return _____ % (to 3 decimals)
Standard deviation _____ % (to 3 decimals)
What would be the expected return and standard deviation, in dollars, for a client investing **$10,000** in such a portfolio?
Expected return _____ $ (to the nearest cent)
Standard deviation _____ $ (to the nearest cent)
**c.** If KA recommends that the client invest **25%** in the All World Fund and **75%** in the treasury bond fund, what is the expected return and standard deviation for such a portfolio?
Expected return _____ % (to 3 decimals)
Standard deviation _____ % (to 3 decimals)
What would be the expected return and standard deviation, in dollars, for a client investing **$10,000** in such a portfolio?
Expected return _____ $ (to the nearest cent)
Standard deviation _____ $ (to the nearest cent)
![**Investment Portfolio Recommendations**
**d. Which of the portfolios in parts (b) and (c) would you recommend for an aggressive investor?**
I would recommend the portfolio in [Select your answer] for an aggressive investor because it has a [Select your answer].
**Which would you recommend for a conservative investor?**
I would recommend the portfolio in [Select your answer] for a conservative investor because it has a [Select your answer].](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2d8ced1e-c405-49cc-9707-ee99115bb45e%2F16c64400-f68a-4eea-ae26-42b39a5e73d3%2Fhbgrvt5_processed.png&w=3840&q=75)
Transcribed Image Text:**Investment Portfolio Recommendations**
**d. Which of the portfolios in parts (b) and (c) would you recommend for an aggressive investor?**
I would recommend the portfolio in [Select your answer] for an aggressive investor because it has a [Select your answer].
**Which would you recommend for a conservative investor?**
I would recommend the portfolio in [Select your answer] for a conservative investor because it has a [Select your answer].
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