... a) You have just secured a portfolio analyst job with a major equity fund. You...
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... a) You have just secured a portfolio analyst job with a major equity fund. You have found it difficult to focus on more than 30 stocks which have been drawn from several industries. A client has come to you and said to forget about the 30 stocks and concentrate solely on 5 stocks. You need to respond to the client. In your response you must only respond within the context of modern portfolio theory. Critique the client suggestion. Discuss what factors are most important in selecting stocks for a portfolio. (4 marks) b) You currently own the following portfolio of shares. Using the information provided in the table, calculate the expected return on your portfolio. The current risk-free rate is 1.5%, and the market risk premium is 2.5%. (6 Marks) Company Beta Total Value of Shares Bulk Nutrients Inc 1.2 BioX 1.9 PineApple Express 2 AUDEnergy 0.8 $45,000 $26,000 $23,500 $85,000 ... a) You have just secured a portfolio analyst job with a major equity fund. You have found it difficult to focus on more than 30 stocks which have been drawn from several industries. A client has come to you and said to forget about the 30 stocks and concentrate solely on 5 stocks. You need to respond to the client. In your response you must only respond within the context of modern portfolio theory. Critique the client suggestion. Discuss what factors are most important in selecting stocks for a portfolio. (4 marks) b) You currently own the following portfolio of shares. Using the information provided in the table, calculate the expected return on your portfolio. The current risk-free rate is 1.5%, and the market risk premium is 2.5%. (6 Marks) Company Beta Total Value of Shares Bulk Nutrients Inc 1.2 BioX 1.9 PineApple Express 2 AUDEnergy 0.8 $45,000 $26,000 $23,500 $85,000
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a Modern Portfolio Theory MPT is a widely recognized framework for constructing portfolios that seek to optimize the tradeoff between risk and return The clients suggestion to concentrate solely on 5 ... View the full answer
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