b) given the ability of borrowing or lending at the risk-free rate, currently 4.5 percent. Determine the most appropriate strategic asset allocation; and Determine the weight of total equities ( U.S and non-U.S. combined) and risk free securities.

Problem 5 Spending Corner Portfolio Number Expected Return OD (12 Points) (L02) rate is 8%, inflation rate is 1.51% and management fecs is 34 basis points Exhibit 1 Corner Portfolios (Risk her Rate 4.895) Expected Standard Sharpe Nou Devtation US (%) Ratio I'S Equites Equines 10.8 161 019 10.4 142 03 00 3 10.3 127 00 74.1 4 91 9.1 0.31 337 8.0 74 03 25.0 6 6.9 52 016 7 US a. To meet the return requirement, with no leverage, select the appropriate combination of porttoos for the strategic asset allocation. Determine the weight of total equites (U's, and non US combined) 1000 32 Asset Classes (Portfolio Weights 15 Intermediate Non U.S. fert U.S. US Real Bones Bonds Estate 00 00 00 DO DO 176 10 DO 120 16 00 176 HIS 451 145 13 310 21 112 10 OUR 00 00 OM (6 points) Problem 5 Spending Corner Portfolio Number Expected Return OD (12 Points) (L02) rate is 8%, inflation rate is 1.51% and management fecs is 34 basis points Exhibit 1 Corner Portfolios (Risk her Rate 4.895) Expected Standard Sharpe Nou Devtation US (%) Ratio I'S Equites Equines 10.8 161 019 10.4 142 03 00 3 10.3 127 00 74.1 4 91 9.1 0.31 337 8.0 74 03 25.0 6 6.9 52 016 7 US a. To meet the return requirement, with no leverage, select the appropriate combination of porttoos for the strategic asset allocation. Determine the weight of total equites (U's, and non US combined) 1000 32 Asset Classes (Portfolio Weights 15 Intermediate Non U.S. fert U.S. US Real Bones Bonds Estate 00 00 00 DO DO 176 10 DO 120 16 00 176 HIS 451 145 13 310 21 112 10 OUR 00 00 OM (6 points)