Question1: A portfolio manager has been asked to create & manage a portfolio with a capital appreciation objective. The manager is subject to the following guidelines presented in the investment policy statement:
[A] The portfolio should contain both large and small company shares.
[B] The portfolio should contain a maximum of 40% large company shares.
[C] The portfolio should contain a minimum of 40% small company shares.
[D] The portfolio should contain a maximum of 15% cash.
The portfolio manager has created the following portfolio:
|
Security
|
Dollar Value of Investment
|
Large Company
|
Small Company
|
|
National Australia Bank
|
$170,000
|
X
|
|
|
AMP
|
$165,000
|
X
|
|
|
Woolworths
|
$175,000
|
X
|
|
|
Energy Developments
|
$87,500
|
|
X
|
|
Pacific Brands
|
$85,000
|
|
X
|
|
PMP Limited
|
$80,000
|
|
X
|
|
MYOB
|
$60,000
|
|
X
|
|
Cash
|
$177,500
|
|
|
With reference to the guidelines with which the manager was provided, critique the portfolio that the manager has created [Note: you will require running some basic computation].