Imagine you are a provider of portfolio insurance. You are establishing a four-year program. The portfolio you manage is currently worth $50 million, and you promise to provide a minimum return of 0%. The equity portfolio has a standard deviation of 25% per year, and T-bills pay 4.2% per year. Assume for simplicity that the portfolio pays no dividends.1. What percentage of the portfolio should be placed in bills?2. What percentage of the portfolio should be placed in equity?3. Calculate the put delta and the amount held in bills if the stock portfolio falls by 3% on the first day of trading?

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

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