You are working in an investment advisory firm where your primary job is to support your clients
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Question:
Mr. Kashif wants to invest 5 million but he doesn’t have any idea how to make a portfolio that would be diversified enough to mitigate the risk. However, you asked a few questions from Mr. Kashif to know his financial health and potential to bear losses.
2. He has 3 children, ages of children are 7, 11, and 15 and the elder one is about to go college which requires annual fees of PkR 150,000.
3. He wants to earn at least a return that compensates for the inflationary pressure in the future. The current inflation rate of Pakistan is hovering around 8.90%.
4. According to him, he believe, he can able to take more risk.
5. He also planned for leisure trip with family after 3 years which required PkR 2 million. Being an advisor you gathered all the relevant data to consult him in a better way.
Allocation Portfolio A Portfolio B Portfolio C
Cash 5% 20% 5%
Equities 20% 25% 60%
Money Market Funds 60% 40% 15%
Gold 15% 15% 20%
Total 100% 100% 100%
Expected Return 15% 18% 22%
Volatility 17% 20% 25%
Requirements
Suggest which investment portfolio is feasible for Mr. Kashif in order to fulfill his objectives?
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