Student Solution

-->

"Education is the most powerful weapon which you can use to change the world”
– Nelson Mandela

1 University

1 Course

1 Subject

Week 2- Case Study

Week 2- Case Study

Q Instructions The Week 2 Case Study Assignment is the first part of a series of analytical tasks, spanning several weeks. Your task involves an analysis of general economic conditions or systematic risk, i.e., the risk that affects all industries and companies, in the U.S. macroeconomy. Your goal is to determine in percentage terms an optimal allocation of $1,000,000 among the following three asset classes: U.S. equities, U.S. Treasury bonds, and cash. In Week 2, submit your analysis of U.S. equities. The goal is to maximize your expected return over the next 12 months. Write a 1 to 2-page paper providing your analysis of the asset classes' prospects and your justification of your allocation of monies among them.

View Related Questions

Solution Preview

Systematic Risks The total risk is caused by the aspects beyond the mechanism of a specific organization or individual. It is based on external factors of the organization. All the investments and securities are related to systematic risk. That’s why it's non-diversifiable risks. It cannot be diversified away by attaining a considerable number of securities (CFI, 2021). Beta is used to determine and reduce an asset's systematic overall risk.