Question

You manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 29%. The T-bill rate is 8%. Your client chooses to invest 65% of a portfolio in your fund and 35% in a T-bill money market fund. Suppose that your risky portfolio includes the following investments in the given proportions: Stock A 35 % Stock B 35 % Stock C 30 % What are the investment proportions of your client’s overall portfolio, including the position in T-bills?

Answer 1

Answer:

Investment proportions of client's overall portfolio

Tbills = 35 %

Stock A 22.75 % = 35% * 65%

Stock B 22.75 % = 35% * 65%

Stock C 19.50 % = 35%* 65%