Your company TCI Investments Inc. was approached by three different potential investors. As Junior Analysts at the company you have been assigned one of potential investors and is being asked to construct an Investment Portfolio for the client.

The following gives an overview of the potential investors.

Mr. Lyons

He is a 45-year-old farmer who is looking to invest in order to ensure that he can retire comfortably. He wants to invest $100,000 of his savings and be able to reap benefits in the next 15-20 years.

The company has always maintained diversification in the management of their clients portfolios and has identified the following markets as prime investment opportunities.

Fundamental analysis of the countries probable economic conditions reveals the following:

Possible Economic Condition	China (Steel)		Germany (Automobile)			Singapore (Financial)		Trinidad Tobago (Oil)	and
	Probability	ROI	Probability		ROI	Probability	ROI	Probability	ROI
Boom	.70	12%	.35		15%	.45	14%	.50	16%
Recession	.10	8%	.05		7.5%	.25	7%	.15	6%
Normal	.20	10%	.60		10.5%	.30	12.5%	.35	13%

TCI Investments Inc have decided that they would use a combination of the following assets classes in any one of their portfolios:

Stocks (Listed on any Stock Exchange); Bonds (Companies or Government); and Cash Equivalents.

The following information was retrieved from the four economies about the financial assets:

Economy		Expected (Ri)		Standard Deviation (i)
	Stocks	Bonds	Cash Equivalent	Stocks	Bonds	Cash Equivalent
China	19%	9%	3%	.36	.15	.02
Germany	16%	8.5%	5%	.25	.08	.01
Singapore	23%	8%	5.5%	.50	.20	.04
Trinidad and Tobago	10%	7.5%	4%	.15	.07	.005

Required:

1. Calculate the E(Ri) for each economy and discuss the results;
2. Calculate the following for the portfolio you have come up with for your investor: a. E(port);
   2. ²(port); and
   3. (port);