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Portfolio: Build an optimal allocation
Practical case: your client has €500K to invest. Build their portfolio by calculating key metrics.
Stock AnalysisIntermediateCalculation
A 45-year-old client with a balanced profile wants to invest **€500,000** over a 10-year horizon.
You propose the following allocation:
- **60% Global equities** (expected return: 8%, volatility: 16%)
- **30% Bonds** (expected return: 3%, volatility: 5%)
- **10% Cash** (expected return: 2%, volatility: 0%)
Equity/bond correlation: **-0.2** (they diversify each other).
Given
| Total amount | 500000 € |
| Equity weight | 60 % |
| Bond weight | 30 % |
| Equity return | 8 % |
| Equity volatility | 16 % |
| Bond return | 3 % |
| Equity/bond correlation | -0.2 |
Question 1/3
What is the expected portfolio return?
%
0/3