You are the manager of an investment fund. Your job is to advise clients on what portfolio best suits their needs, given their characteristics. You have four different client types. I. The retired Donald, who at the age of 74, has finally retired and is looking to enjoy life. II. A 25-year-old woman (Vanessa), who has just begun a long and hopefully successful career as a software engineer. III. A couple (Eddy and Cathy), both 41 years of age and have two young children. Both earn high incomes and wish to retire at the age of 60. IV. 64-year-old Powell, who is hoping to retire from his job at the magical printing industries over the next 2 years. You can choose to offer any one of the following four portfolios to each of your clients. Portfolio Alpha Beta Assets Allocation 75% shares, 10% property, 5% precious metals basket, 5% cryptocurrencies basket, 5% fixed interest (cash) 60% shares, 20% property, 2.5% precious metals basket, 2.5% cryptocurrencies basket, 15% fixed interest (cash) 15% shares, 45% property, 2% cryptocurrencies basket, 2% precious metals basket, 36% fixed interest (cash) 10% shares, 35% property, 1% cryptocurrencies basket, 1% precious metals basket, 53% fixed interest (cash) Gamma Delta 1. Complete Table 1 below by calculating the historical returns for each portfolio, as well as the expected return, denoted by E(R), and the risk (standard deviation) denoted by o, for each of the asset classes as well as the four portfolios. 2. Define the two components of risk faced by an investor. How does diversification reduce an investor's risk? Provide a real-life example of diversification in Finance. Hint: real-life example must be specific investments, don't simply state asset classes. You should provide academic references for this question. (4 marks) 3. Calculate the Coefficient of Variation (CV) for each asset class. What does the CV measure? (3 marks) 4. 74-year-old Donald was advised by a friend that he will be better off converting his entire portfolio into cryptocurrencies, as 'it is by far the best performing asset class over the last decade' and 'stocks and properties are only for boomers'. Is the friend's advice sound for a retiree like Donald? Why or why not? Hint: discuss concepts such as risk, diversification and comment on the merit of basing decisions on historical returns only. You should provide academic references for this question. (4 marks) 5. For EACH of the four client types, recommend the most suitable portfolio option and justify your selection. Use language that the clients will understand. (4 marks)