Part 1:Describe an example of a minimally diverse portfolio. You must include at least 3 investments...

Part 1:Describe an example of a minimally diverse portfolio. You must include at least 3 investments and the percentage of distribution for each
Part 2: Explain why this portfolio is minimally diverse
Part 3: Explain whether this portfolio is aggressive, conservative, or moderate portfolio and why

Solutions

Expert Solution

Answer(1): Minimally diverse portfolio- As the name suggest, minimal diverse portfolio has less stocks but the portfolio is well diversified. It has some stocks of different industries, it does not have more stocks but few.

Example: I am an investor and invest for long term. My portfolio is minimally diverse portfolio which contains four stocks of different industries:

Stock name	Industry	Weight
Apple Inc.	Technology	25%
Johnson & Johnson	Pharma	25%
Walmart Inc.	FMCG	25%
Wells Fargo	Financial services	25%

Answer(2): This portfolio is minimally diverse because it has only four stocks and not many stocks. Minimally diverse portfolio provides higher return than the various stocks in the portfolio. If portfolio contains many stocks, return will be lower.

Answer(3): This portfolio is an "Aggressive one". It contains less number of stocks and these all stocks belong to equity market so the portfolio is aggressive.

jeff jeffy answered 1 year ago

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