Question
Suppose you are the manager of a mutual fund and a client comes to you wanting to invest 55% of his portfolio into your mutual
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Suppose you are the manager of a mutual fund and a client comes to you wanting to invest 55% of his portfolio into your mutual fund and the remaining 45% into a safe money market fund. The mutual fund that youmanagehasanexpectedrateofreturnof12%andastandarddeviationof15%. Themoneymarketfund rate is 12 of 1%. (a) If your client invests as described above, what is the expected return and standard deviation of his portfolio? (b) The fund that you manage has the following stocks and their corresponding proportions: Stock X: 40%, Stock Y: 35%, and Stock Z: 25%. If we include the position in the riskless asset, what are the investment proportions of your clients portfolio?
Suppose you are the manager of a mutual fund and a client comes to you wanting to invest 55% of his portfolio into your mutual fund and the remaining 45% into a safe money market fund. The mutual fund that youmanagehasanexpectedrateofreturnof12%andastandarddeviationof15%. Themoneymarketfund rate is 12 of 1%. (a) If your client invests as described above, what is the expected return and standard deviation of his portfolio? (b) The fund that you manage has the following stocks and their corresponding proportions: Stock X: 40%, Stock Y: 35%, and Stock Z: 25%. If we include the position in the riskless asset, what are the investment proportions of your clients portfolio?
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