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You've invested all your financial wealth in two exchange - traded funds: SPY , that tracks the S&P 5 0 0 Index, and GTIP, that
You've invested all your financial wealth in two exchangetraded funds: SPY that tracks the S&P Index, and GTIP, that invests exclusively in US governmental bonds.
Suppose that currently the average returns of SPY and GTIP are respectively and
Suppose also that currently you hold $ million in SPY and $ million in GTIP.
Questions:
A What proportion of your portfolio weight are you currently investing in SPY
B What proportion of your portfolio weight are you currently investing in GTIP?
C What is the current average return of your portfolio?
D If you want to rebalance your portfolio to achieve a target average return of what proportion your portfolio weight should you put in SPY and what proportion should you put in GTIP?
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