Question

it is now time to prepare a report to management to explain why ms. delgado did not earn 10% each year on her investment. make a recommendation in terms of a revised portfolio model that can be used so that jean delgado can have an expected portfolio balance of $110,000 at the end of next year. prepare a report that includes a modified optimization model that will give an expected return of 10% on the amount of money available at the beginning of the year before paying the transaction costs. explain why the current model does not do this.

Answer 1

The current portfolio model may not provide a 10% return due to various factors. To achieve a 10% return, a revised portfolio model with adjustments such as increased allocation to higher-yielding assets and minimized transaction costs can be recommended. A modified optimization model can be used to ensure the desired return.

Step-by-step explanation:

In order to explain why Ms. Delgado did not earn 10% each year on her investment, we need to consider the current portfolio model. The current model may not provide a 10% return due to factors such as investment diversification, market volatility, and transaction costs.

To recommend a revised portfolio model that can achieve an expected portfolio balance of $110,000 at the end of next year with a 10% return, we can consider adjustments such as increasing the allocation to higher-yielding assets, minimizing transaction costs, and carefully selecting investment options.

A modified optimization model can be used to ensure an expected return of 10% on the available funds before paying transaction costs. This model will take into account factors such as risk tolerance, time horizon, and market conditions to optimize the portfolio composition and achieve the desired return.