3. You just finished your MBA in finance. Pepito Investor, your neighbor, followed the advice of Agapito and won $10,000,000 in the Loto. Mr. Investor wants to invest that prize; for that, he wants to take advantage of your expertise. He needs your help designing a portfolio, both at asset class and security levels. You have prepared the following recommendation based on numerous meetings with Mr. Investor. a. Out of the $ 10,000,000, Pepito will invest 80% in the equity market and the rest in cash. b. The equity market investment would be in a very concentrated portfolio All PR Stocks (a very parochial investment approach, I must ad) Below are the names and very important stats about the stocks you are recommending Pepito Standard Expected Deviation of Return Returns 15% 24 12% 18 5 Ticker Populoso POP Doubles Second Banks Betas 1.20 1.10 3% 0.90 POP POP 1 0.25 0.75 Correlation Matrix D 0.25 1 0.25 0. 2 1 c. You recommend initially investing in equal proportions in POP, D and S d. Have different stock weights in your equity portfolio for i. a bull market ii. a neutral market iii, a bear market Required: a. What should be his asset allocation? ($ and %s) b. For the equity portfolio, determine: i. Portfolio Risk ii. Expected Return iii. Sharpe-Ratio c. What would be your recommended weights for the scenarios in (d) above. c. Draw 1. The efficient frontier using data provided (that is show the key values of the axes) ii. The CAL 30 pts