Achieve the optimum outcome based on the theory

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(a.) Carefully explain to someone who is not an expert in ?nance how they should allocate their wealth if they have TEN risky assets and ONE risk free rate to choose from. The investor is risk averse. You might want to use diagrams and state key equations and provide a step by step guide as regards what needs to be done. It is important that your explanations are clear, well structured and that by following them you should achieve the optimum outcome based on the theory.

(b.) Suppose you are a US (Dollar) based investor and your financial advisor has calculated the optimum portfolio weights using historic data and the optimisation proposed by H. Markowitz. The financial advisor suggest that you should invest 10% in the US, 75% into Europe and 15% into Asian equities. Discuss briefly whether you should diversify internationally and whether you should follow the advice regarding the optimum weights.

Reference no: EM133117056

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