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Assuming Mr. Li is a rational investor with a return hurdle of 14% and a maximal volatility tolerance of 16% and wants a portfolio that
Assuming Mr. Li is a rational investor with a return hurdle of 14% and a maximal volatility tolerance of 16% and wants a portfolio that is well diversified and desigrved for maximized efficiency while also maintaining a small cash balance for emergencies, which of the following portfolios would you recommend? Portfolio 1 2 3 4 Domestic Equities 45.0% 30.0% 40.0% 25.0% Domestic Bonds 45.0% 20.0% 30.0% 20.0% International Equities 5.0% 20.0% 0.0% 20.0% Hedge Funds 0.0% 20.0% 0.0% 15.0% Cryptocurrency 0.0% 0.0% 10.0% 10.0% Real Estate 3.0% 5.0% 20.0% 10.0% Cash 2.0% 5.0% 0.0% 0.0% 15.0% Return 15.0% 19.0% 16.0% 13.0% 19.0% 15.0% 16.0% Risk .45 1.05 1.1 0.75 Sharpe Ratio O 1 04 O2 O 3
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