Question

Go Global Investment Management has an asset allocation strategy of 70% U.S. investments and 30% global investments. Within the United States, Go Global has allocated 65% of its portfolio to equities and 35% to bonds. Go Global now holds 4% of its U.S. equity portfolio in the stock of Wally World. Internationally, Go Global has allocated 62% to equities and 38% to bonds. About what percentage of Go Global's total portfolio is invested in Wally World?

Multiple Choice

• 1%

• 1.5%

• 1.82%

• 1.26%

Answer 1

Solution :

As per the information given in the question we have

Go Global Investment Management has an asset allocation strategy of 70% U.S. investments and 30 % global Investments.

Of this, Within the United States, Go Global has allocated 65% of its portfolio to equities and 35% to bonds.

Thus the total Equity portfolio of Go global in the United States = Percentage of asset allocation in the United States * Percentage of portfolio investment in Equities

= 70 % * 65 %

= 45.50 %

Thus the total equity portfolio of Go Global = 45.50 %

Also, Go Global holds 4% of its U.S. equity portfolio in the stock of Wally World.

Thus the percentage of Go Global's total portfolio invested in Wally World = Total equity portfolio of Go Global * 4 %

= 45.50 % * 4 %

= 1.82 %

The percentage of Go Global's total portfolio invested in Wally World = 1.82 %

The solution is option 3 = 1.82 %