Previously, the emphasis was on obtaining information from clients. In this chapter, the emphasis was on preparing witnesses for trial. To properly prepare witnesses for trial, the paralegal needs to….
Which portfolio would you choose to obtain an expected return around 5.25%?
Currency portfolio. It is recommended that you solve this problem using a spreadsheet. You are a euro-zone investor with 1 billion euros to be invested in dollars (USD), yen (JPY), or pounds sterling (GBP). You are given the following market data and forecasts:
(a) Plot the three currencies on a risk-return chart, taking the interest produced by each currency into account.
(b) Draw the risk-return evolution of a portfolio which gradually switches from dollars to yen (i.e. 100% in dollars initially, then 90% in dollars and 10% in yen, etc.). Repeat this question for a portfolio which gradually switches from yen to pounds, and then from pounds to dollars.
(c) Plot the risk-return profiles of all possible portfolios made of the three currencies, considering only long investment positions in multiples of 5%.
(d) Which portfolio would you choose to obtain an expected return around 5.25%? Is this choice optimal?