Question

a.  Based on the current portfolio composition and the expected rates of return given​ above, what is the expected rate of return for​ Barry's portfolio?

b.  Barry is considering a reallocation of his investments to include more Treasury bills and less exposure to emerging markets. If Barry moves all of his money from the emerging market fund and puts it in Treasury​ bills, what will be the expected rate of return on the resulting​ portfolio?

(Portfolio expected rate of return) Barry Swifter is 60 years of age and considering retirement. Barry's retirement portfolio currently is valued at $750,000 and is allocated in Treasury bills, an S&P 500 index fund, and an emerging market fund as follows: . a. Based on the current portfolio composition and the expected rates of return given above, what is the expected rate of return for Barry's portfolio? b. Barry is considering a reallocation of his investments to include more Treasury bills and less exposure to emerging markets. If Barry moves all of his money from the emerging market fund and puts it in Treasury bills, what will be the expected rate of return on the resulting portfolio? %. (Round to two decimal a. Based on the current portfolio composition and the given expected rates of return, the expected rate of return for Barry's portfolio is places.) X i - Data Table Expected $Value Return Treasury bills 4.6% 89,000 S&P 500 Index Fund 6.7% 407,000 11.2% Emerging Market Fund 254,000

Answer 1

1)	Expected Return Of Portfilo is the weighted average rate
	Particulars	Value	Weight	Rate %	PortfolioExpected Rate %
	a	b	c=b/750000	d	e=c*d
	Treasury Bill	89000	0.12	4.6	0.55
	S&P 500 Index Fund	407000	0.54	6.7	3.64
	Emerging Market Fund	254000	0.34	11.2	3.79
		750000	1		7.97
	Therefore Portfolio Expected Rate Of Return =7.97%
2)	If Barry moves all of his money from the emerging market fund and puts it in Treasury Bills
	Expected Rate of return will be rate of treasurry bill because weight of treasurry bill is equal to 1
	Therefore expected rate of return = 4.6%