Answer:
Blair & Rosen (B&R) Plc.
Recommendation for moderate investor:
Internet fund = 96/240 * $500,000 = $200,000
Blue-chip fund = 144/240 * $500,000 = $300,000
Annual return for the portfolio:
Internet fund = $200,000 * 12% = $24,000
Blue-chip fund = $300,000 * 9% = $27,000
Total portfolio returns = $51,000
Annual returns of portfolio = $51,000/$500,000 * 100 = 10.2%
Recommendation for aggressive investor:
Internet fund = 192/320 * $500,000 = $300,000
Blue-chip fund = 128/320 * $500,000 = $200,000
Step-by-step explanation:
a) Data and Calculations:
Maximum investible savings = $500,000
Projected annual return of the internet fund = 12%
Projected annual return of the blue-chip fund = 9%
Maximum determined amount to invest in the internet fund = $350,000
Risk rating for the internet fund = 6/1,000
Risk rating for the blue-chip fund = 4/1,000
Maximum risk rating for a moderate investor = 240
Maximum risk rating for an aggressive investor = 320
Recommendation for moderate investor:
Internet fund = 96/240 * $500,000 = $200,000
Blue-chip fund = 144/240 * $500,000 = $300,000
Annual return for the portfolio:
Internet fund = $200,000 * 12% = $24,000
Blue-chip fund = $300,000 * 9% = $27,000
Total returns = $51,000
Annual returns of portfolio = $51,000/$500,000 * 100 = 10.2%
Recommendation for aggressive investor:
Internet fund = 192/320 * $500,000 = $300,000
Blue-chip fund = 128/320 * $500,000 = $200,000
