You currently have $300,000. You want to invest it in the following three assets: 10-year US Treasury bond with coupon rate 3.8%, Blandy and Gourmange stocks below: (See table attached) Your goal is to have the expected return of 6.8% with a minimum portfolio risk. How much money should you allocate to these three assets?
You currently have $300,000. You want to invest it in the following three assets: 10-year US Treasury bond with coupon rate 3.8%, Blandy and Gourmange stocks below: (See table attached) Your goal is to have the expected return of 6.8% with a minimum portfolio risk. How much money should you allocate to these three assets?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You currently have $300,000. You want to invest it in the following three assets: 10-year US Treasury bond with coupon rate 3.8%, Blandy and Gourmange stocks below:
(See table attached)
Your goal is to have the expected return of 6.8% with a minimum portfolio risk. How much money should you allocate to these three assets?
Transcribed Image Text:Year
Average annual return
Standard deviation of annual return
Correlation between Blandy and Gourmange
Blandy
6.4%
25.2%
0.11
Gourmange
9.2%
38.6%
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