Mr. A is interested in investing - 10,00,000 for which he is considering following three alternatives: (i) Invest - 10,00,000 in Mutual Fund X (MFX)…
CA Final · Advanced Financial Management · MTP · May 2026
Mr. A is interested in investing - 10,00,000 for which he is considering following three alternatives: (i) Invest - 10,00,000 in Mutual Fund X (MFX) (ii) Invest - 10,00,000 in Mutual Fund Y (MFY) (iii) Portfolio - Invest - 6,00,000 in Mutual Fund X (MFX) and - 4,00,000 in Mutual Fund Y (MFY) Average annual return earned by MFX and MFY is 12% and 11% respectively. Risk free rate of return is 8% and market rate of return is 10%. Covariance of returns of MFX, MFY and market portfolio Mix are as follow: MFX MFY Mix MFX 4.400 4.300 3.370 MFY 4.300 4.200 2.800 Mix 3.370 2.800 4.200 Based on the above information answer the following questions:
Suggested Answer and Working Notes:
Correct Answer: Option (D)
2.0494
Topics: Portfolio Management, Mutual Fund
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