Top Choice Investments, one of the companies that you have been investing for, have given you £2,000,000 to invest for them. The funds can be invested in one or more projects.
These projects are all indivisible. The investors require a minimum return of 25% and they are high risk takers.
Details of the projects are as follows.
|
Initial Cost (£)
|
Expected Return
|
Risk (s)
|
|
Project A
|
1,200,000
|
22%
|
8%
|
|
Project B
|
800,000
|
28%
|
10%
|
|
Project C
|
1,200,000
|
30%
|
15%
|
|
Project D
|
1,200,000
|
34%
|
17%
|
Correlation Co-efficients between the securities
|
A
|
B
|
C
|
D
|
|
A
|
+1
|
+0.7
|
+0.6
|
+0.6
|
|
B
|
+0.7
|
+1
|
+0.65
|
+0.3
|
|
C
|
+0.6
|
+0.65
|
+1
|
+0.8
|
|
D
|
+0.6
|
+0.3
|
+0.8
|
+1
|
Required:
Advice Top Choice Investments on how all of the £2M should be invested using portfolio theory showing appropriate calculations