Question: Case 1: The case 1 questions are on the article Cash pays more than 60/40 portfolios for the first time since 2001 (dated 1 March

Case 1: The case 1 questions are on the article Cash pays more than 60/40 portfolios for the first time since 2001 (dated 1 March 2023). They are intended to test and deepen your understanding of the impact of changes in interest rate outlook and economic growth on the value of a portfolio.

Q1: What is a 60/40 portfolio?

Q2: What are some reasons it is a recommended portfolio for many ordinary investors?

Q3: Do you think a 60/40 portfolio is suitable for you?

Q4: What is the normal relationship between bond prices and share prices?

Q5: Why did the return to both bonds and shares decrease simultaneously recently?

Q6: Would you expect cash to persistently earn a higher return than a 60/40 portfolio? Why or why not?

Q7: Other things being equal, what return would you expect on the 60/40 portfolio if expected inflation were to (a) increase, (b) stay the same, or (c) decrease?

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