Question
amet has just informed you of three strategies (a), (b) and (c) that it wants to use. In this strategy, Kamet will invest in the
amet has just informed you of three strategies (a), (b) and (c) that it wants to use. In this strategy, Kamet will invest in the order of expected return hence the highest proportion of its funds is to be invested starting from the asset that yields the highest expected return irrespective of the risk level. The order is as follows: Assets 1st Measured by Return 2nd Measured by Return 3rd Measured by Return Percentage of funds invested 45% 35% 20% (b). In this strategy, Kamet will invest in the order of riskiness of the assets hence the highest proportion of its funds is to be invested starting from the assets with the lowest risk irrespective of the expected return. The order is as follows. Assets 1st Measured by Risk 2nd Measured by Risk 3rd Measured by Risk Percentage of funds invested 50% 30% 20% (c). In this strategy, Kamet will invest in the order shown below Assets Unilever Starwin Anglogold Percentage of funds invested 30% 30% 40% Compute the portfolio expected return for each of the strategies (a), (b), and (c) and advise Kamet as to the best strategy to select on the basis of the expected return you have computed.
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