Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Blair &. Rosen, Inc. (B&R) is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A
Blair \&. Rosen, Inc. (B\&R) is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B\&R this past week has a maximum of $50,000 to invest. B\&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 18%, and the Blue Chip fund has a projected annual return of 8%. The investment advisor requires that at most $25,000 of the client's funds should be invested in the Internet fund. B\&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 5 per thousand dollars invested. The Blue Chip fund has a risk rating of 5 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B\&R's risk rating for the portfolio would be 5(10)+5(10)=100. Finally, B\&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B\&R recommends that a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 230. (c) Suppose that a second client with $50,000 to invest has been classified as an aggressive investor: B\&R recommends that the maximum portfolio risk rating for an aggressive investor is 340 . What is the recommended investment portfolio for this aggressive investor? Internet Fund =$ Blue Chip Fund =$ Annual Return =$ (d) Suppose that a third client with $50,000 to invest has been classified as a conservative investor. B\&R recommends that the maximum portfolio risk rating for a conservative investor is 150. Develop the recommended investment portfolio for the conservative investor. If an amount is zero, enter "0". Internet Fund =$ Blue Chip Fund =$ Annual Return =$
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