Investment decision, Portfolio Management

An investment manager at TD Ameritrade is making a decision about a $10,000,000 investment.  There are four portfolio options available and she is looking at annual return of these portfolios to choose one.   Market has four possible situations: bad, average, good, and excellent.  Each portfolio may have a different estimated rate of return under a known market situation.  For "Bad", "Average", "Good", and "Excellent" market, "Option 1" has return rates of 33%, 28%, 1%, and loss of 15% respectively.  These numbers are 22%, 12%, 17%, and loss of 5% for "Option 2", 8%, 9%, 14%, and 16% for "Option 3", and finally for "Option 4" these rates are loss of 2%, 5%, 12%, and 35% under "Bad", "Average", "Good", and "Excellent" market situations. 

a.    Compare the outcomes for all portfolios under any market situation.  What is the best portfolio under Minimax Regret rule? 

b.    Does the outcome change if the investment decision was made based on the expected value of portfolios?  Why? Probabilities for bad, average, good, and excellent market situations are 35%, 22%, 25%, and 18% respectively.

 

 

Posted Date: 10/1/2012 8:21:17 AM | Location : United States







Related Discussions:- Investment decision, Assignment Help, Ask Question on Investment decision, Get Answer, Expert's Help, Investment decision Discussions

Write discussion on Investment decision
Your posts are moderated
Related Questions
what is the first step in the investment process in the development

**See uploaded files** Question #''s 5 & 10, and problems #''s 1 a-c, 2 a-c,4 a-c, 5 a-b, & 6 a-c need to be answered and work shown.

Ask question #Minimum 100 words acce8-10 pagespted#

A trade association presenting the title insurance sector. It was founded in 1907. The American Land Title Association also focuses on a property's abstract of title, which binds t

b) Mr. Castro uses a 20% hatch system of timing when to invest in a stock market. In a given, the top of a given share was Shs.150/= and its bottom was Shs.90. During the year the

An investment manager at TD Ameritrade is making a decision about a $10,000,000 investment.  There are four portfolio options available and she is looking at annual return of these

solve the mean variance problem to construct a portfolio f a securities consider in ar least 5 securities:no short salling and with lending & borrowing


It is an option that can be applied anytime in its lifetime. American options permit option holders to implement the option at any time previous to and including its maturity date,

Choose any five securities at random and determine the average returns for each company for the 132 months along with the variance and standard deviation of these returns. Next con