Returns and Actions. Kunal Nayyar from London, had

$50,000 in investments in the USA at the beginning of the year that consisted of a diversified portfolio of stocks

(40 percent), bonds (40 percent), and cash equivalents

(20 percent). His returns over the past 12 months were 13 percent on stocks, 6 percent on bonds, and 1 percent on cash equivalents.

(a) What is Kunal’s average return for the year?

(b) If Kunal wanted to rebalance his portfolio to its original position, what specific actions should he take?

AppendixLO1