question2 b

a) (2 marks): The SAA has a 60:40 moderate defense bias and the portfolio management team has recommended a 60:30:10 [Asset 1:Asset 2:Asset 3] allocation. What has been the average return on this portfolio over the the period of evaluation? b) (3 marks): 40% allocation must be allocated to growth assets. Based on your understanding of growth assets, that come with higher risk and are expected to provide higher returns, explain why these investments provide higher returns? Use an example of risks faced by an investor in a firm's equity to help demonstrate your answer. Question 3 a) (2 marks): This question is related with risk parity SAAs. Explain which asset [Asset 1 , Asset 2 or Asset 3] will have the lowest allocation in a SAA, where each asset has an equal marginal risk contribution to the SAA. b) (3 marks): When Excel Solver is used to allocate assets with the objective to minimize volatility for a given level of returns, explain why some assets get very low allocations? Further explain, which of the three assets [Asset 1, Asset 2 or Asset 3] is expected to have the lowest allocation for this 60:30:10 moderate defense [Note: no calculations are required to answer this question]. a) (2 marks): The SAA has a 60:40 moderate defense bias and the portfolio management team has recommended a 60:30:10 [Asset 1:Asset 2:Asset 3] allocation. What has been the average return on this portfolio over the the period of evaluation? b) (3 marks): 40% allocation must be allocated to growth assets. Based on your understanding of growth assets, that come with higher risk and are expected to provide higher returns, explain why these investments provide higher returns? Use an example of risks faced by an investor in a firm's equity to help demonstrate your answer. Question 3 a) (2 marks): This question is related with risk parity SAAs. Explain which asset [Asset 1 , Asset 2 or Asset 3] will have the lowest allocation in a SAA, where each asset has an equal marginal risk contribution to the SAA. b) (3 marks): When Excel Solver is used to allocate assets with the objective to minimize volatility for a given level of returns, explain why some assets get very low allocations? Further explain, which of the three assets [Asset 1, Asset 2 or Asset 3] is expected to have the lowest allocation for this 60:30:10 moderate defense [Note: no calculations are required to answer this question]