A formerly wealthy Silicon Valley executive is currently reassessing his financial portfolio. His portfolio consists of an
Question:
A formerly wealthy Silicon Valley executive is currently reassessing his financial portfolio. His portfolio consists of an S&P 500 index fund, stock options in his company, some 5-year US Treasury bonds, and some cash in money market accounts. His other assets include a condo in Palo Alto, a convertible Porsche, and himself (that is, his education and skills to be used to generate future income).
You have been hired by the executive to recommend an additional asset class to invest in. Using the knowledge of mean-variance optimization you learned in class, which of the following investment vehicle is the best choice to consider for this executive.
A. house in Palo Alto (and sell the condo).
B. Russell 2000 iShares (a fund that tracks an index of small-cap stocks).
C. A global mutual fund investing in Europe and Asia.
D. Technology stocks other than that of his own company.
E. Stocks in his own company.
Probability and Statistics
ISBN: 978-0321500465
4th edition
Authors: Morris H. DeGroot, Mark J. Schervish