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QSO 520 Module Six Homework

QSO 520 Module Six Homework

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QSO 520 Module Six Homework Question

 
1.     (P6-35) Theo Harris earns $55,000 a year and has $9,000 to invest in a portfolio. His investment alternatives and their expected returns are shown in the table below.
 
Investment

Description

Expected Return

A

IRA (retirement)

3.5%

B

Employer’s retirement plan

4.5%

C

Deferred income (retirement)

8.0%

D

Unity mutual fund

7.0%

E

Liberty mutual fund

7.5%

F

Money market

5.5%

 
 
Theo’s investment goals are as follows and can be ranked according to the weights shown in parenthesis.
Question 1: Which investments should be included in Theo’s portfolio
 
Question 2: How much should he invest in each?
 
Goal 1: (25) Invest all funds available.
Goal 2: (20) Maximize the total annual return in dollars, with a target of $1,000.
Goal 3: (15) Invest at least 3% of salary in employer’s retirement plan.
Goal 4: (15) Invest at least 10% of the total investment in the money market.
Goal 5: (10) Invest at most 25% of the total investment in retirement plans.
Goal 6: (10) Invest at least 50% of the total investment in non-retirement plans.
Goal 7: (5) Invest at most 50% of the total investment in mutual funds.
 
Question 3: Which investments should be included in Theo’s portfolio?


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