I attached the whole project so that you can know what the project is about but I want you to work only on the report.Assignment: please in one to two page work on the 2 first questions of the report...

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I attached the whole project so that you can know what the project is about but I want you to work only on the report.










Assignment: please in one to two page work on the 2 first questions of the report which are:













a. Introduction: introduce the problem ,provide som background













b: problem statement: describe the problem you are proposing to solve,













c: state the assumption if any.



QNT2020 Project 2 Asset Allocation Problem Due: 05/14/2023 11:59PM Investment advisory firms offer investment advice and provide their clients with the best mix of financial assets to invest in with different risk tol erance levels. Assume that you work for XYZ investment advisory firm that uses an asset allocation model to recommend the portion of each client's portfolio to be invested in three nds, Alpha, Bravo, and Charlie. Table 1 shows XYZ's general guidelines of the minimum and esaximum percentage e of the total portfolio value invested in these three funds. For example, if a client has $100,000 to invest, the amount of Alpha fund in the portfolio will be between $20,000 to $40,000 ($100,000*20% to $100,000*40%.) In addition, XYZ attempts to assess the risk tolerance of each client and adjust the portfolio to meet the needs of the individual investor. Table 1. Min/Max percentage of the total portfolio | Minimum Percentage Invested | Maximum Percentage Invested 20% | 45% Bravo 15% | | 50% Now you have a new client Mr. Smith who has $800,000 to invest. Based on an evaluation of Mr. Smith's risk tolerance, you assign a maximum risk index of 0.05 for him. Table 2 shows the individual risk rating of the funds based on XYZ's risk indicators. An overall portfolio risk index is computed as a weighted average of the risk rating for the three funds, where the weights are the fraction of the client’s portfolio invested in each of the funds. Additionally, annual yields forecasted by XYZ are also shown in Table 2. Based on the information provided, how should Mr. Smith be advised to allocate the $800,000 among Alpha, Bravo, and Charlie funds? What is the annual yield yoy anticipate for the investment recommendation? Table 2. Risk ratings and yields of the funds LL _ RiskRating Annual Yields Tn Ti 18% Charlie ||| o.om He TT T Je You are asked to develop a linear programming model that will provide the maximum yield for the portfolio. Create a spreadsheet model to develop an optimal feasible solution of the investment portfolio to present to Mr. Smith. Write up a report to recommend how much of the $800,000 should be invested in each of the three funds and what the annual yield is Additionally, use the model to do some analysis and answer the following questions: 1. Assume that Mr. Smith's risk index could be increased to 0.06. How much would the yield increase, and how would the investment recommendation change? 2. Refer again to the original situation, in phen Mr. Smith's risk index was assessed to be 0.05. How would your investment reccsymendation change if the annual yield for the Alpha were revised downward to 17.5% or even to 16%? Assume that the client expressed some concern about having too much money in the Alpha. How would the original recommendation change if the amount invested Alpha is not allowed to exceed the amount invested in Bravo? Report Format 1. Please submit your project report in pdf format. Also submit your workshaats, 2. You can use the following outline for your project report: a. b. C. d. f. . Additional Results: answer above add ition Introduction: introduce the problem, provide some background Problem Statement: describe the problem you are Proposing to solve, State the assumptions (if any) i Data Description: list the sources of data you expect to extract data for developing the analysis. Provide any references you used. Describe the data (explain any terms that are specific to your dataset) Methods: discuss your modelling approach and identify al ebiion vatiaplds, What is the objective function? What is the. nature, of the objective function (linear, non-linear, etc. )? What are your constraints? Whati is ‘the nature of your constraints (linear, integer, binary)? What are your d cision solver method did you adopt to develop the portfolio ficatment recommendation? ¢ THI Results: discuss the outcome Honoris i mi! I al. analysis questions. Conclusion: Do you have a recomme ndation?, Include tables and visuals/to support ny i TH : Your projec reports should b tyour analysis (iF any), SAP J 1 ill [tmp QNT2020 Project 2 Asset Allocation Problem Due: 05/14/2023 11:59PM Investment advisory firms offer investment advice and provide their clients with the best mix of financial assets to invest in with different risk tol erance levels. Assume that you work for XYZ investment advisory firm that uses an asset allocation model to recommend the portion of each client's portfolio to be invested in three nds, Alpha, Bravo, and Charlie. Table 1 shows XYZ's general guidelines of the minimum and esaximum percentage e of the total portfolio value invested in these three funds. For example, if a client has $100,000 to invest, the amount of Alpha fund in the portfolio will be between $20,000 to $40,000 ($100,000*20% to $100,000*40%.) In addition, XYZ attempts to assess the risk tolerance of each client and adjust the portfolio to meet the needs of the individual investor. Table 1. Min/Max percentage of the total portfolio | Minimum Percentage Invested | Maximum Percentage Invested 20% | 45% Bravo 15% | | 50% Now you have a new client Mr. Smith who has $800,000 to invest. Based on an evaluation of Mr. Smith's risk tolerance, you assign a maximum risk index of 0.05 for him. Table 2 shows the individual risk rating of the funds based on XYZ's risk indicators. An overall portfolio risk index is computed as a weighted average of the risk rating for the three funds, where the weights are the fraction of the client’s portfolio invested in each of the funds. Additionally, annual yields forecasted by XYZ are also shown in Table 2. Based on the information provided, how should Mr. Smith be advised to allocate the $800,000 among Alpha, Bravo, and Charlie funds? What is the annual yield yoy anticipate for the investment recommendation? Table 2. Risk ratings and yields of the funds LL _ RiskRating Annual Yields Tn Ti 18% Charlie ||| o.om He TT T Je You are asked to develop a linear programming model that will provide the maximum yield for the portfolio. Create a spreadsheet model to develop an optimal feasible solution of the investment portfolio to present to Mr. Smith. Write up a report to recommend how much of the $800,000 should be invested in each of the three funds and what the annual yield is Additionally, use the model to do some analysis and answer the following questions: 1. Assume that Mr. Smith's risk index could be increased to 0.06. How much would the yield increase, and how would the investment recommendation change? 2. Refer again to the original situation, in phen Mr. Smith's risk index was assessed to be 0.05. How would your investment reccsymendation change if the annual yield for the Alpha were revised downward to 17.5% or even to 16%? Assume that the client expressed some concern about having too much money in the Alpha. How would the original recommendation change if the amount invested Alpha is not allowed to exceed the amount invested in Bravo? Report Format 1. Please submit your project report in pdf format. Also submit your workshaats, 2. You can use the following outline for your project report: a. b. C. d. f. . Additional Results: answer above add ition Introduction: introduce the problem, provide some background Problem Statement: describe the problem you are Proposing to solve, State the assumptions (if any) i Data Description: list the sources of data you expect to extract data for developing the analysis. Provide any references you used. Describe the data (explain any terms that are specific to your dataset) Methods: discuss your modelling approach and identify al ebiion vatiaplds, What is the objective function? What is the. nature, of the objective function (linear, non-linear, etc. )? What are your constraints? Whati is ‘the nature of your constraints (linear, integer, binary)? What are your d cision solver method did you adopt to develop the portfolio ficatment recommendation? ¢ THI Results: discuss the outcome Honoris i mi! I al. analysis questions. Conclusion: Do you have a recomme ndation?, Include tables and visuals/to support ny i TH : Your projec reports should b tyour analysis (iF any), SAP J 1 ill [tmp
Answered 1 days AfterMay 03, 2023

Answer To: I attached the whole project so that you can know what the project is about but I want you to work...

Shivali answered on May 04 2023
22 Votes
Time Series Analysis
Introduction
Investment advisory firms play a crucial role in the financial industry, providing professional advice and guidance to individuals and institu
tions seeking to invest their money wisely. These firms use various investment models and tools to analyse the market and identify the best mix of financial assets to invest in, considering the investor's risk tolerance level, investment goals, and financial circumstances. The asset allocation model is one such tool used by investment advisory firms to recommend the portion of the investor's portfolio to be invested in different funds.
In this report, we will focus on XYZ investment advisory firm, which uses an asset allocation model to recommend the portion of each client's portfolio to be invested in three funds, Alpha, Bravo, and Charlie. The firm aims to provide the best mix of financial assets while ensuring that the client's portfolio is diversified across different funds to minimize the risk.
The problem we aim to solve in this report is to determine the optimal allocation of Mr. Smith's $800,000 among the three funds, Alpha, Bravo, and Charlie, while considering his risk tolerance level and the individual risk rating and annual yield of each fund. We will use a linear programming model to maximize the portfolio's annual yield subject to the constraints on the minimum and maximum percentage of the portfolio to be invested in each fund.
Investing in financial assets always involves some degree of risk, and the amount of risk a client is willing to take varies depending on their circumstances and preferences. Therefore, assessing the client's risk tolerance level is critical in determining the optimal asset allocation. In our case, we assume that Mr. Smith's risk tolerance...
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