This post discusses various ec

1. We would not suggest a change in the investment recommendation if the annual yield is revised downward to 16% as it is within the Range of Optimality. However, if it were to change to 14%, it will be outside the lower limit. As such, the value will change from$94,133 to $85,067, therefore, we would not recommend going below 15% .
Any lower index values that fall outside the growth fund’s range of optimality under the origins recommendation would warrant a new investment strategy for client, as these values would result in a change of the originally projected total annual yield value.
Then of present recommendation of investment allocation in the growth fund is based on the funds given range of optimality, which measures from 15% to an infinite number of annual yield values. This range indicates that any possible index increase of this fund i.e,16% and higher, would not have an impact in the portfolio’s optimal asset allocation yet. It would positively affect the objective functions total annual yield value from the original projected value of $94,133.

Conversely, potential downward fluctuations, failing below the growth funds annual yield lower limit index of 15%, would constitute a deviation from the original recommended asset allocation and it’s corresponding projected value of $94,133, as the new value falls outside the fund’s range of optimality. To illustrate, if the growth fund’s annual yield value would decrease to 14%, the corresponding total annual return would also decrease to $8.

2. Financial portfolio theory stresses obtaining a proper balance between risk and return. Choosing the appropriate constraints is an effective method that ensures this balance. Given the risk indexes of 0.10 and 0.07 of the growth fund and income fund respectively, the client may opt to choose a less aggressive approach by limiting the growth fund’s investment amount to equal, ye not surpass, the amount invested in the income fund. This change in investment strategy, however, would generate a lower annual yield of $85,067, than the projected annual return of $94,133 by the original, more risky recommendation.

3. J.D William would recommend the use of this model only when the potential new clients meet the present outline criteria i.e., similar objectives and constraints. The company mission, however, is to provide the professional, financial advised that best meets the individual investors’ needs. The company would therefore, not recommend the use of this asset allocation model as a general guide to financial investment.