Question 4 (15 marks) Ben, age 30, starts to invest for his retirement. There are three portfolios in the market: Portfolio Constituents A 80% of stock and 20% of corporate bond B 70% of stock and 30% of corporate bond C 20% of stock, 40% of corporate bond 40% of U.S. Treasury-bill The expected return for the investments are as following: Investment Expected return Stock 9% Corporate bond 4.5% U.S. Treasury-bill 2% (a) According to the Rule of 100, which portfolio shall Ben choose? (3 marks) (b) Ben would like to choose Portfolio C for his retirement fund because he is risk-averse. How would you convince him that he is making a bad decision? (3 marks) (c) How long will it take to double the investment in Portfolio B? (4 marks) (d) Bens goal is to have a retirement fund of $4,000,000 when he retires at age 65. Ben plans to set up an investment fund and put $35,000 into this fund at the end of each year for the next 35 years. Which portfolio can help him to achieve such a goal? (5 marks)