QUESTION 1. You are a recent graduate that has been hired at “Price Family Paper” as...

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QUESTION 1. You are a recent graduate that has been hired at“Price Family Paper” as their new Assistant to the RegionalManager. You realize how important saving money for retirement is,so you enroll in the company sponsored retirement plan on Day 1.They offer employees two options for their investments:
Portfolio A: 50% stocks, 20% bonds, 20% mutual funds, 5%t-bills, 5% cash
Portfolio B: 80% stocks, 15% mutual funds, 5% bonds
Which portfolio is better for you to invest in and why? Wouldthis change over time or remain consistent?
QUESTION 2.
Based on the efficient frontier graph,which of the following portfolios is the only portfolio that couldexist for investors?
           a.   4% risk, 8% return
           b.   7% risk, 10% return
           c.   17% risk, 26% return
           d.   24% risk, 40% return
           e.   Any of the above portfolios may be valid forinvestors

Answer & Explanation Solved by verified expert

4.3 Ratings (634 Votes)

Question 1 Since the Assistant to Regional manager is a young recent graduate and has a long term horizon to invest with a goal to save for retirement heshe should invest in Portfolio B 80 stocks 15 mutual funds and 5 bonds The individual under See Answer

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QUESTION 1. You are a recent graduate that has been hired at“Price Family Paper” as their new Assistant to the RegionalManager. You realize how important saving money for retirement is,so you enroll in the company sponsored retirement plan on Day 1.They offer employees two options for their investments:Portfolio A: 50% stocks, 20% bonds, 20% mutual funds, 5%t-bills, 5% cashPortfolio B: 80% stocks, 15% mutual funds, 5% bondsWhich portfolio is better for you to invest in and why? Wouldthis change over time or remain consistent?QUESTION 2.Based on the efficient frontier graph,which of the following portfolios is the only portfolio that couldexist for investors? a. 4% risk, 8% return b. 7% risk, 10% return c. 17% risk, 26% return d. 24% risk, 40% return e. Any of the above portfolios may be valid forinvestors