. You just finished your MBA in finance. John Investor, your neighbor, followed the advice of John and won $10,000,000 in the Lottery.

Mr. Investor wants to invest that prize; for that, he wants to take advantage of your expertise. He needs your help designing a portfolio, both at asset class and security levels.

You have prepared the following recommendation based on numerous meetings with Mr. Investor.

a. Out of the $ 10,000,000, John will invest 80% in the equity market and the rest in cash.

b. The equity market investment would be in a very concentrated portfolio-All Puerto Rico Stocks (a very parochial investment approach, I must ad). Below are the names and very important stats about the stocks you are recommending John

stock	ticker	expected return	standard deviation of returns	betas
POP	POP	15%	24	1.2
Double S	D	12%	18	1.1
Second Bank	S	3%	5	0.9

	correlation matrix
	POP	D	S
POP	1%	0.25	0.75
D	25%	1	0.25
S	75%	0.2	1

You recommend initially investing in equal proportions in POP, D and S

d. Have different stock weights in your equity portfolio for

i. a bull market

ii. a neutral market

iii. a bear market

Required:

a. What should be his asset allocation? ($ and %s)

b. For the equity portfolio, determine:

i. Portfolio Risk

ii. Expected Return

iii. Sharpe-Ratio

c. What would be your recommended weights for the scenarios in (d) above.

c. Draw

i. The efficient frontier using data provided (that is show the key values of the axes)

ii. The CAL