Harvard Management Company (HMC) employs a Policy Portfolio to determine its approximate investments into different asset classes. This portfolio is computed using the tools of mean-variance analysis. HMC describes its Policy Portfolio as "The Policy Portfolio is a theoretical portfolio allocated among asset classes in a mix that is judged to be most appropriate for the University from both the perspective of potential return and risk." The 2009 Endowment report from HMC shows how the Policy Portfolio has evolved between 1995 and 2010. Using this information, answer the following questions: 

(a) How did the fraction of total equity investments change between 1995 and 2010? 

(b) Some asset classes, such as commodities, are not associated with any one country. Others, such as equities, can be classified as domestic and foreign investments. How did HMC's allocation to domestic investments, when identified as such, change between 1995 and 2010?

Answer rating: 100% (QA)

Here is the analysis of the changes in HMCs Policy Portfolio between 1995 and 20... View the full answer