5. You are a wealth manager and have the ability to invest in the following stocks. Each stock has an expected return for the next year. Each company, based on the value of the company, is classified as a large, medium or small cap company. Expected return Cap Type Company (1 large, 2 medium, 3 small) Vianet 7.50% 2 Agritek 8.60% 1 7.90% 3 Akamai Baidu 6.10% 1 Blucora 5.20% 1 Boingo 8.00% 3 BrainyBrawn 1.20% 3 Carbonite 3.50% N W Finance Online 3.80% ChitChats 7.60% Crexendo 7.10% Endexx 6.50% N N W W - - 1 Envestnet 6.60% Liberty Power 7.00% Flashzero 5.80% Facebook 4.7021 Genesis 9.10% LAC 2.30% - W - 1 InterNAP 6.70% iPass 5.80% w J2 Global 4.70% 3 A client comes to you and wants to maximize their return for this year. She has $500,000 in which to invest. She has specific requirements to which she wants you to adhere. She wants no more than 25% of her portfolio to include small cap companies and no less than 60% of her portfolio in large cap companies. As diversification is important, she requires that one stock cannot be more than 25% of her portfolio. a. Based on this information, where should you invest her money? (10 points) b. How much would the return be if your client had $40,000 more to invest? Explain. (5 points) c. If you could invest more money in any one stock, without changing the small cap or large cap requirements, which one would you choose and why? (5 points) 1. Your client read in the Financial Times that large cap companies are the best investment. She wants to increase the requirement in large cap companies to 65%. What effect will this have on the return to her portfolio? (5 points)