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- Clients today require their investments to not only produce genuine impact but also constant positive returns. As the portfolio manager explain to your client how you will maintain a positive return on the current portfolio selected. Please answer #1 to #3 Explain the selection of optimal portfolios. Describe the portfolio approach to investing and the portfolio management process Differentiate between financial and non-financial sources of risks Incorporate the appropriate performance measures for portfolios Evaluate asset returns using the CAPM and other models such as The Sharpe ratio, the Treynor measures and Jensen’s AlphaYou are working as a portfolio associate and your manager assigned task to find out which investment option is feasible for existing portfolio. All of the investment options are riskier than market however still manager wants to optimize its risk in given investment options. Requirements: Calculate Average of each of the investment option. Calculate the Risk of each of the investment option. Calculate the Co-efficient of Variation of each investment option. Calculation of correlation each of the investment option. Calculate Beta of each of the investment option. Give your conclusion or recommendation which investment option is best for you in comparison to least risky.As the chief investment officer for a money management firm specializing in taxable individual investors, you are trying to establish a strategic asset allocation for two different clients. You have established that Ms. A has a risk-tolerance factor of 8, while Mr. B has a risk-tolerance factor of 27. The characteristics for four model portfolios follow: ASSET MIX Bond 93% 75 32 13 Portfolio 1 2 3 4 Stock 7% 25 GB 87 a. Calculate the expected utility of each prospective portfolio for each of the two clients. Do not round intermediate calculations. Round your answers to two decimal places. 1 2 3 Portfolio Ms. A ER 8% 9 10 11 b. Which portfolio represents the optimal strategic allocation for Ms. A? Which portfolio is optimal for Mr. B? Portfollo-Select-represents the optimal strategic allocation for Ms. A. Portfolio Select is the optimal allocation for Mr. B. c. For Ms. A, what level of risk tolerance would leave her indifferent between having Portfolio 1 or Portfolio 2 as her strategic…
- Portfolio optimization is the “holy grail” of investing. All investors are seeking the optimal portfolio that will maximize returns while minimizing risks. The Excel spreadsheet is the “optimizer” for the average investor. What are the primary benefits of using Excel portfolio optimization analysis? How would you optimize your portfolio using Excel?Primo Management Company is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how to choose the best benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of benchmarking. For the sake of discussion, Jones put together some comparative two-year performance numbers that relate to Primo’s current domestic funds under management and a potential benchmark. Style Category Weight Return Primo Benchmark Primo Benchmark Large-cap growth 0.60 0.50 17% 16% Mid-cap growth 0.15 0.40 24 26 Small-cap growth 0.25 0.10 20 18 As part of her analysis, Jones also takes a look at one of Primo’s global funds. In this particular portfolio, Primo is invested…Primo Management Company is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how to choose the best benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of benchmarking. For the sake of discussion, Jones put together some comparative two-year performance numbers that relate to Primo’s current domestic funds under management and a potential benchmark. Style Category Weight Return Primo Benchmark Primo Benchmark Large-cap growth 0.60 0.50 17% 16% Mid-cap growth 0.15 0.40 24 26 Small-cap growth 0.25 0.10 20 18 As part of her analysis, Jones also takes a look at one of Primo’s global funds. In this particular portfolio, Primo is invested…
- Financial planner Minnie Margin wishes to develop a mutual fund portfolio based on the Markowitz portfolio model. She needs to determine the proportion of the portfolio to invest in each of the five mutual funds listed below so that the variance of the portfolio is minimized subject to the constraint that the expected return of the portfolio be at least 5%. Formulate the appropriate nonlinear program. Minnie assumes that the more recent returns are more likely to occur. She assumes that the probability of occurrence of scenario 1 is 40%, of scenario 2 is 30%, of scenario 3 is 20% and of scenario 4 is 10%. Annual Returns (Planning Scenarios) Mutual Fund Year 1 Year 2 Year 3 Year 4 International Stock 22.37 26.73 4.86 2.17 Large-Cap Value 15.48 19.64 11.50 -5.25 Mid-Cap Value 17.42 20.07 -4.97 -1.69 Small-Cap Growth 23.18 12.36 3.25 3.81 Short-Term Bond 9.26 8.81 6.15 4.04 If Minnie…Primo Management Company is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how to choose the best benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of benchmarking. For the sake of discussion, Jones put together some comparative two-year performance numbers that relate to Primo’s current domestic funds under management and a potential benchmark. Style Category Weight Return Primo Benchmark Primo Benchmark Large-cap growth 0.60 0.50 17% 16% Mid-cap growth 0.15 0.40 24 26 Small-cap growth 0.25 0.10 20 18 As part of her analysis, Jones also takes a look at one of Primo’s global funds. In this particular portfolio, Primo is invested…You have just been appointed as a fund manager for Gate Way Fund, of which you will be responsible of a portfolio that consists of two assets. The analysts have provided you with the expected returns and standard deviations of returns of which are listed in the table below: Asset A Asset B Expected Return 7% 11% Standard Deviation 15% 21% Calculate the standard deviation of the portfolio if the assets are equally weighted. The two asset portfolio model can be extended two a portfolio with more assets. Explain the implications of this approach for the understanding of portfolio risk and discuss the practical problems of applying the model in this fashion.
- Jason Jackson is attempting to evaluate two possible portfolios consisting of the same five assets but held in different proportions. He is particularly interested in using beta to compare the risk of the portfolios and, in this regard, has gathered the following data: LOADING... . a. Calculate the betas for portfolios A and B. b. Compare the risk of each portfolio to the market as well as to each other. Which portfolio is more risky? Question content area bottom Part 1 Data table (Click on the icon here in order to copy its contents of the data table below into a spreadsheet.) Portfolio Weights Asset Asset Beta Portfolio A Portfolio B 1 1.35 17% 29% 2 0.69 26% 8% 3 1.24 10% 22% 4 1.06 11% 20% 5 0.87 36% 21% Total 100% 100% a. The beta of portfolio A is enter your response here. (Round to three…Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 9%, Op = 24%, rf = 2%. Required: a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 8%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? b. What will be the standard deviation of the rate of return on her portfolio? c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 12%. Which client is more risk averse?Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 11%, op = 12%, rf =,2%. Required: a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 7%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? b. What will be the standard deviation of the rate of return on her portfolio? c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 17%. Which client is more risk averse? Complete this question by entering your answers in the tabs below. Required A Required B Required C Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 7%. What proportion should she invest in the…
