FIN540 Advance Corporate Finance

"Portfolio Theory"

Imagine that one of your clients has $100,000 to invest. Propose the manner in which you would apply portfolio theory to this scenario. In order to explain this you will first discuss your client's profile, then you will discuss the specific asset classes and the percentages of the $100,000 that will be alloted to each asset class. Justify your response by explaining how this proposed portfolio fits your client's profile and needs.

Speculate on where your client would be on the efficient frontier and if your client's preference curve would be more vertical or more horizontal. Provide a rationale for your response.