Problem 1. (Portfolio Allocation) Considering following four: an aggressive growth fund (Fund 1), an index fund
(Fund 2), a corporate bond fund (Fund 3), and a money market fund (Fund 4), each with different expected annual return and risk level. Fund Type Growth Index Bond Money Market Fund Number 1 2 3 4 Expected Return 20.69% 5.87% 10.52% 2.43% Risk Level 4 2 2 1 Maximum Investment 40% 40% 40% 40% In order to contain the risk of the investment to an acceptable level, the amount of money allocated to the aggressive growth plus the corporate bond funds cannot exceed 60% of the portfolio, and the average risk level of the portfolio cannot exceed 2. The total amount invested should be $10 million. What is the optimal portfolio allocation for achieving the maximum expected return at the end of the year, if no short selling is allowed?
Recently Asked Questions
- Nadiya, your classmate, is struggling to keep up with class. Last week, she told you that she even thought about cheating on a test. If you and Nadiya are good
- A publicly-funded, anti-vaping behavioral intervention targeting youth has a utility value of .8 and youth targeted by this intervention could potentially gain
- Describe the history of health insurance in post-industrial America through today. What federal policies have influenced this evolution and how? In your