Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Based on the data and the optimal risky portfolio above, calculate the following optimal complete portfolio, comprised of a bond and equity fund. for a

image text in transcribedimage text in transcribed

Based on the data and the optimal risky portfolio above, calculate the following optimal complete portfolio, comprised of a bond and equity fund. for a client looking to invest $100,000. There are two classes of funds that you are able to purchase for your clients portfolio, class A and class B funds. The class A funds have a front-end load fee of 4% and an annual operating expense fee of 1%. The class B funds have no front-end load fee and an annual operating expense fee of 1.5%. The client has a risk aversion score of 3.5, and a holding period of 14. These are the items that need to be calculated:

  1. Ending dollar amount in risk-free
  2. Ending dollar amount risky (Class A)
  3. Ending dollar amount risky (Class B)
  4. Ending dollar amount total (Class A)
  5. Ending dollar amount total (Class B)
  6. Expected returns from Risky Portfolio
\begin{tabular}{|l|r|r|r|r|} \hline Risk-free rate & 0.04 Vanguard Bond Fund (Bonds) & & Fidelity Fund (Equity) \\ \hline & & & 0.090799 \\ \hline Expected Return & & 0.05126 & 0.100693333 & 0.216145786 \\ \hline Standard Deviation & 0.247876701 & 0.131824617 & 0.909201 \\ \hline Correlation Coefficient & & & \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Multinational Finance

Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman

4th Edition

9780132138079

More Books

Students also viewed these Finance questions