A) Provide a real world example as to how you would invest $100,000 of your money. (This means to identify by name the two mutual funds you invest in.) Show your percentage allocations.

 

B) Assume that you have $500,000 to invest and you are solely limited to building your portfolio in the same two mutual funds. Further assume that nothing else has changed (the same degree of risk aversion, the same age, the same job, the same income). Show your percentage allocations.

 

C) Discuss as to why you changed or did not change your percentage allocations. What does the CAPM approach to building a portfolio say in this regard?

 

D) Assume your objective now in both A, and B above is to earn more than the market return, show your new allocations