1. A Financial Advisor helps (FA) one of the firmís clients to diversify their portfolio. According to the clients profile the FA recommends the following plan.
Investment / Fraction of Total Portfolio
Technology Stocks 1/5
Pharmaceutical stocks 1/10
Banking & Finance 2/7
Real Estate 1/5
The remainder is in cash in money market accounts.
a) What fraction of the portfolio is in cash ?
b) If the cash holdings are $7,000 what is the total value of the portfolio?
c) Six months later due to the volatility in the market the Financial Advisor instructs
the client to sell two thirds() of his technology holdings and deposit the money in a
money market account. What fraction of the portfolio is represented by the
technology stocks after the investor (client) completes the transaction