Explanation:
390 \times 0.45 = \$175.5` \text{ million}
% \text{ of allocation in fund} = \frac{175.5}{7000} = 0.0251 \text{ or } 2.51%
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Q.3228 Tom Daniel is a portfolio manager at XinWin pension fund investing in common stocks. XinWin has a policy around liquidity risk measure to limit each of its holdings to a maximum of 45% of its 30-day average value traded. If the fund size is $7 billion, what is the maximum allocation that the fund can hold in a stock with a 30-day average value traded of $390 million?
A
17.56%
B
2.25%
C
2.51%
D
5.57%