Your broker has suggested that you diversify your investments by splitting your

Question

Your broker has suggested that you diversify your investments by splitting your portfolio among mutual funds, municipal bond funds, stocks, and precious metals. She suggests five good mutual funds, six municipal bond funds, five stocks, and three precious metals (gold, silver, and platinum).

(a) Assuming your portfolio is to contain one of each type of investment, how many different portfolios are possible?
choices

(b) Assuming your portfolio is to contain four mutual funds, five municipal bond funds, one stock, and two precious metals, how many different portfolios are possible?
choices

Explanation / Answer

a) The number of investment options = 5

Number of different portfolios are possible is 5! =1*2*3*4*5 = 120

b) No.of mutual funds =4 ; no.of muncipla funds = 5 ; 1 stock ; 2 precious metals

total invest ment option = 4+5+1+2 =12

total number of portfolios possible = 12! =

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