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The following information is available regarding corner portfolios from an efficient frontier.
An investor has a spending rate of 8%. If inflation is expected to be 3.50% annually and the cost of earning investment returns is 0.5%, which of the following represents the correct weight of one of the asset classes that will at a minimum satisfy the investor’s goals of capital preservation in real terms to an investor with a risk aversion value of 4? A. Asset class 3 with weight of 39.00%. B. Asset class 1 with a weight of 42.90%. C. Asset class 2 with weight of 50.00%. |