1.Please construct an investment portfolio that is appropriate for your client: She is 60 years old and plans to retire within 5 years. She has $4 million to invest. She is primarily interested in...

According to the Ques. Following data was provided:
PROBLEM STATEMENT:
Assume you have USD 4 million cash to be invested in a self-decided weighted portfolio. The portfolio will comprise five stocks from S&P 500 based on the nature of the holder which as per the Ques. Is shared is a retired person so based upon creating a medium of constant income at the same time creating a medium of growth to combat inflation as well as providing a back up to combat against the market correction & risk following portfolio is suggested.
1) Two Large-Cap from S&P 500
2) A multi-cap fund
3) A small-cap
4) And an Index fund
Selecting Large Cap Funds:
· Amazon
· Facebook
Criteria: Both are based on long term goal growth as both are not into paying dividends, the risk to return ratio is very less, very stable stocks low volatility and company’s proclaim to make better use of dividends has shown in the past as per the records. So, I’ll consider them as a long term asset in my treasury.
Selecting Mid-Cap Fund:
· Fidelity Mid Cap Index Fund (FSMDX)
Criteria: This is the most critical category and requires extensive research while development. There is a 0.025% gross expense ratio and no minimum investment required. As of the end of May 2020, the fund held $12.8 billion in assets. Its five-year average annual return was 5.94%, matching its benchmark.7 The fund had allocated 20.04% of assets to information technology, 13.51% to industrials, 12.19% to healthcare, 11.08% to financials and 10.6% to consumer discretionary. Top individual holdings included Fiserv (FISV), Advanced Mirco Devices (AMD), Global Payments (GPN), L3 Harris Technologies (LHX) and Dollar General (DG).
Selecting Small-Cap Fund:
· Crawford Small Cap Dividend
Criteria: Paying Dividend and overall record.
Selecting Index Fund:
· Vanguard S&P 500 ETF
Criteria: High returns and market size.
ANALYSIS:
Source for data collection:
Yahoo Finance: Refer Excel
    
    
    Note: Calculations for optimal weightages will be done seperately.
    
    Dashboard:
    Monthly Averages:
    
    
    
    
    
    
    Annualized
Record
    at equal weightages
    Averages:
    2.98%
    1.97%
    -0.81%
    -1.03%
    1.03%
    0.86%
    10.01%
    
    Variance
    0.66%
    0.64%
    1.92%
    1.98%
    0.18%
    0.17%
    11.12%
    
    Standard Deviation
    8.13%
    8.02%
    13.87%
    14.06%
    4.24%
    4.17%
    8.75%
    
    
    
    
    
    
    
    
    
    
    Sharpe Ratio:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Risk Free Rate, Rf
    0.85%
    
    
    
    
    
    
    
    Portfolio Return, Rm
    9.93%
    at equal weightage
    
    
    
    
    
    Standard Deviation, Std.
    33.35%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sharpe Ratio
    0.27
    
    
    
    
    
    
    
Based on the data analysis performed in the Excel it is evident that portfolio is not yet yielding a decent return when maintained at equal weightage with a value of above 1 indicated a good portfolio, obviously higher the better. Basically, the Sharpe ratio gives a measure of where the curve will switch the slope line at what deviation the more the value is the more is the expectation of arriving at the desired returns.
    Optimal Weightages
    
    Dashboard Records:
    
    Amazon
    0.01
    Averages:
    9.93%
    Facebook
    0.10
    Variance
    12.93%
    FSMDX
    0.36
    Standard Deviation
    35.95%
    CDOFX
    0.28
    
    
    VOO
    0.25
    
    
    
    
    
    
    Weights Total
    1
    
    
    Therefore, returns as per
weights
    Returns
    Variance
    Std, Dev.
    Amazon
    0.025%
    0.068%
    
    Facebook
    0.20%
    1.389%
    
    FSMDX
    0.29%
    5.054%
    
    CDOFX
    0.29%
    1.188%
    
    VOO
    0.26%
    1.063%
    
    
    
    
    
    Average
    2.6%
    1.752%
    1.32%
    
    
    
    
    Optimized Sharpe Ratio:
    1.33
    
    
    Calculation of Beta:
    
    
    
    
    
    
    
    
    
    
    
    Individual Slope:
    1.27
    1.26
    1.22
    1.21
    1.01
    Optimal Portfolio Beta
    1.17
    
    
    
    
    SUMMARY OUTPUT:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Regression Statistics
    
    
    
    
    
    
    
    Multiple R
    0.917843708
    
    
    
    
    
    
    
    R Square
    0.842437072
    
    
    
    
    
    
    
    Adjusted...