CA Test Series
Q3(b): Investible fund = 5,00,000 on 1st Jan, 2017.
Client has mentioned that portfolio should not fall by more than 20%. Client has agreed to a multiplier of 1.5. Rebalancing is to be done every quarter. Rf = 8% per annum compound quarterly.
Current share price 300
Share price on 1st April 330
Share price on 1st July 360
Calculate the allocation of the portfolio into equity &bond initially & on each rebalancing date.
in the solution of this answer they adjust floor value with RF @2% for 3months?
Why is it so why floor value changes?
