Question
Barry Swifter is 60 years of age and considering retirement. Barry's retirement portfolio currently is valued at $750,000 and is allocated in Treasury bills, an
Barry Swifter is 60 years of age and considering retirement. Barry's retirement portfolio currently is valued at $750,000 and is allocated in Treasury bills, an S&P 500 index fund, and an emerging market fund as follows:
Expected Returns $ Value
Treasury bills 3.7% 62000
S&P 500 Index Fund 7.8% 452000
Emerging Market Fund 13.1% 236000
.
a.Based on the current portfolio composition and the expected rates of return given above, what is the expected rate of return for Barry's portfolio?
b.Barry is considering a reallocation of his investments to include more Treasury bills and less exposure to emerging markets. If Barry moves all of his money from the emerging market fund and puts it in Treasury bills, what will be the expected rate of return on the resulting portfolio?
a.Based on the current portfolio composition and the given expected rates of return, the expected rate of return for Barry's portfolio is ____%
b.If Barry moves all his money out of emerging market funds and puts it in Treasury bills, the expected rate of return for his portfolio is ____%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started