sooner is better Question 1

You are provided with five possible portfolios to select. The portfolios are made up of a combination of three assets: Share A, Share B, and REIT A.

The weightings of each asset per portfolio are shown in Table 1.

A portfolio risk and return calculator is provided for you to calculate the portfolio return, portfolio standard deviation, and standard deviation of the portfolio's excess return given a specific portfolio weighting.

1.1

Use the asset weightings provided in Table 1 and the portfolio risk and return calculator above to calculate the following:

For tutor use only

>

Portfolio return (rounded to the nearest two decimal places)

>

Portfolio standard deviation (rounded to the nearest two decimal places)

>

Standard deviation of portfolio's excess return (rounded to two decimal places)

For example, include the asset weights provided in Table 1 for Portfolio 1 in the grey blocks in the portfolio risk and return calculator.

The portfolio return, portfolio standard deviation, and standard deviation of portfolio's excess return for Portfolio 1 will be calculated automatically in the blue blocks.

Enter the answers that appear in the blue blocks for Portfolio 1 in the grey blocks in the table below. Repeat for each of the other portfolios

1.3

Assume that you are a rational investor (i.e. you wish to maximise your return at a given risk level).

Based on the calculations you performed in Question 1.2, which of the five portfolios would you choose to invest in and why?

Limit your answer to 20 words.

Start writing here:

module : portfolio distribution

Table 1: Potential oortfolio investments. Portfolio risk and return calculator Shoudd aways sum to 100% Portfolio retum Portfolio standard deviation Standard deviation of portfolio's excess retum 1.2 Using your calculations in Question 1.1, calculate the Sharpe ratio for each portfolio, assuming a risk-free rate of 2.6%. Portfolie 1 Pertfolio 2 Portfolio 3 Portfolie 4 Portfolio 5 Portfolo retum Risk-tree rate Standard deviation of porffolio's excess retum Sharpe ratio Tt the grey bleck alongwide. Figure 1: The effciers bontier. 2.1 Which letters correspend to eticient portfotos? Start witing hece: 2.2. Provide one example of an ineficient portolio. Start writing here: 2.3 Which portlolio prequides the greatest retum for the lowest risk? Start wnting here: Table 1: Potential oortfolio investments. Portfolio risk and return calculator Shoudd aways sum to 100% Portfolio retum Portfolio standard deviation Standard deviation of portfolio's excess retum 1.2 Using your calculations in Question 1.1, calculate the Sharpe ratio for each portfolio, assuming a risk-free rate of 2.6%. Portfolie 1 Pertfolio 2 Portfolio 3 Portfolie 4 Portfolio 5 Portfolo retum Risk-tree rate Standard deviation of porffolio's excess retum Sharpe ratio Tt the grey bleck alongwide. Figure 1: The effciers bontier. 2.1 Which letters correspend to eticient portfotos? Start witing hece: 2.2. Provide one example of an ineficient portolio. Start writing here: 2.3 Which portlolio prequides the greatest retum for the lowest risk? Start wnting here