Question: 3. A dynamic asset allocation model is described as: Dollars Invested in Stock = 2.5 (Assets-Floor). Where assets are $700 and floor is desired to

3. A dynamic asset allocation model is described as:

Dollars Invested in Stock = 2.5 (Assets-Floor).

Where assets are $700 and floor is desired to be $550.

a) Calculate the initial asset allocation to stocks and bonds.

b) If stock falls by 15%, calculate the new asset allocation to stocks and bonds.

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