Posted: August 1st, 2022

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ALLOCATION

AND DIVERSIFICATION CASE STUDY

You graduated from college and have been working at a job you like. You received some money at graduation and have been saving on a regular basis. You have accumulated

$20,000

and have decided to open a Fidelity Brokerage account and begin investing. You have been thinking about the type of portfolio you would want to build and what your investing strategy would be. You considered the following 3 portfolios.

Portfolio I is designed for investors with aggressive growth investment objectives. Such investors seek maximum returns and are willing and able to accept high levels of risk and volatility. Current income is not a factor in this portfolio.

Portfolio II is designed for investors with long-term growth objectives. Such investors seek to enhance the value of their capital over time. They are willing to assume a reasonable level of diversified market risk. Current income is not an important factor for such investors.

Portfolio III is designed as a balanced portfolio for current investment income along with capital preservation and modest growth. The portfolio is allocated between equities and fixed-income securities. This portfolio is best suited for conservative investors or those nearing or already enjoying a retirement lifestyle.

You decided to build your portfolio similar to Portfolio II. You decided on several principles to adhere to when building your portfolio and you landed on the funds listed by the principles.

1. A position in technology because you believe it will boom in coming years

ROGSX

2.

Total

stock market exposure with average risk. FSKAX

3. A high growth fund with a great track record.

PRGFX

4. A dividend fund that will add safety in a down market and generates a dividend.

DLTNX

5. An emerging markets fund to take advantage of the growth around the world.

BEXFX

You have determined to use the 5 mutual funds listed above with these priorities:

· Number one priority is growth, broad exposure to the stock market so USE THAT FUND TO ALLOCATE THE MOST. (30

%

)

· Number two priority is high growth. USE THAT FUND TO ALLOCATE the next highest percentage (25%)

· Great exposure to technology. USE THAT FUND TO ALLOCATE the next highest percentage. (20%)

· Some exposure to emerging markets. (15%)

· A bond fund can serve as a hedge in bad times. Allocate. (10%)

TICKER

TYPE

PURCHASED July 24,2017 CLOSING PRICE

ALLOCATION IN DOLLARS

$

ALLOCATION

PERCENTAGE

%

2017 ENDING PRICE

Dec. 6th 2017

$ GAIN/LOSS

% GAIN/LOSS

ROGSX

TECHNOLOGY

$23.87

PRGFX

GROWTH

$66.29

FSTMX

TOTAL MARKET

$71.39

BEXFX

EMERGING MARKETS

$13.76

DLTNX

BONDS

$10.73

Total $20,000

100%

You have $20,000 to invest

Step 1 Go to Yahoo Finance and review each fund.

Step 2 On the above chart enter the dollar and percentage investment AS STATED ABOVE

Step 3 Enter THE CLOSING PRICE ON Dec. 6th, 2017 for each of the 5 funds.

Step 4 What would you have done differently? ____________________________________________________________________________________________

Step 5 Which TICKER had the greatest percentage increase?_________________________________

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