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answerhappygod
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18. (-/3.39 Points] DETAILS ASWMSCI 15 2.E.027. MY NOTES ASK YOUR TEACHER PRACTICE ANOTHER Blair & Rosen, Inc. (B&R), is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has a maximum of $65,000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 9%, whereas the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $45,000 of the client's funds should be invested in the Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 6 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 6(10) + 4(10) = 100. Finally, B&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B&R recommends that a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 310. (a) What is the recommended investment portfolio (in dollars) for this client? internet fund $ blue chip fund S What is the annual return (in dollars) for the portfolio? $ (b) Suppose that a second client with $65,000 to invest has been classified as an aggressive investor. B&R recommends that the maximum portfolio risk rating for an aggressive investor is 350. What is the recommended investment portfolio (in dollars) for this aggressive investor? internet fund $ blue chip fund $ Discuss what happens to the portfolio under the aggressive investor strategy. The aggressive investor places the ---Select-- amount of funds in the high risk but high return Internet fund resulting in an annual return (in dollars) of $ (c) Suppose that a third client with $65,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 200. Develop the recommended investment portfolio in dollars) for the conservative investor. internet fund $ blue chip fund 5 Discuss the interpretation of the slack variable for the total investment fund constraint. The slack (in dollars) for the total investment fund constraint is s This means that investing all $65,000 in the less risky Blue Chip fund is --Select- investor. for the conservative Need Help? Read it
18. (-/3.39 Points] DETAILS ASWMSCI 15 2.E.027. MY NOTES ASK YOUR TEACHER PRACTICE ANOTHER Blair & Rosen, Inc. (B&R), is a brokerage firm that specializes in investment portfolios designed to meet the specific risk tolerances of its clients. A client who contacted B&R this past week has a maximum of $65,000 to invest. B&R's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip fund. The Internet fund has a projected annual return of 9%, whereas the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $45,000 of the client's funds should be invested in the Internet fund. B&R services include a risk rating for each investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 6 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 6(10) + 4(10) = 100. Finally, B&R developed a questionnaire to measure each client's risk tolerance. Based on the responses, each client is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current client as a moderate investor. B&R recommends that a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 310. (a) What is the recommended investment portfolio (in dollars) for this client? internet fund $ blue chip fund S What is the annual return (in dollars) for the portfolio? $ (b) Suppose that a second client with $65,000 to invest has been classified as an aggressive investor. B&R recommends that the maximum portfolio risk rating for an aggressive investor is 350. What is the recommended investment portfolio (in dollars) for this aggressive investor? internet fund $ blue chip fund $ Discuss what happens to the portfolio under the aggressive investor strategy. The aggressive investor places the ---Select-- amount of funds in the high risk but high return Internet fund resulting in an annual return (in dollars) of $ (c) Suppose that a third client with $65,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 200. Develop the recommended investment portfolio in dollars) for the conservative investor. internet fund $ blue chip fund 5 Discuss the interpretation of the slack variable for the total investment fund constraint. The slack (in dollars) for the total investment fund constraint is s This means that investing all $65,000 in the less risky Blue Chip fund is --Select- investor. for the conservative Need Help? Read it