Mr. Blair, a retired Government Officer, has received his retirement benefits. He is contemplating as...
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Accounting
Mr. Blair, a retired Government Officer, has received his retirement benefits. He is contemplating as to how much funds he should invest in various alternatives open to him so as to maximize return on investment. The investment alternatives are government security, fixed deposits of a public limited company, equity shares, time deposits in banks, RRSP and real estate. He has made a subjective estimate of the risk involved on a five-point scale. The data on the return on investment, the number of years for which the funds will be blocked to earn this return on investment and the subjective risk involved are as follows:
Items
Return on Investment (Percent)
Number of years
Risk
Government Securities
6
15
1
Company Deposits
15
3
3
Equity shares
20
6
7
Time Deposits in banks
10
3
1
RRSP
12
6
1
Real Estate
25
10
2
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