Question 3 [15 marks in total] Portfolio X, a CPPI portfolio, has a floor value of $8 million, a market value of $10 million, and a multiplier of 2. The portfolio is rebalanced annually. Portfolio Y, a constant mix strategy of 40% stocks and 60% bonds, has a market value of $10 million. This portfolio is also rebalanced annually. a) Calculate the initial amount of stock investment in each portfolio. I (4 marks) b) Currently, the stock market is up and bond market is down. If you expect the current trend will last for a few more years, which portfolio should you choose? Explain in details. (3 marks) I c) If the stock maket performed as you expected. In the first year, stocks indeed increased by 20% and bonds decreased by 10%. In the second year, stocks increased by 10% and bonds decreased by 5%. Determine the amount of investment for stocks and bonds respectively for the portfolio you choose in b) at the end of first year and second year after rebalancing. (8 marks)