Question: Shabnam is considering three alternatives to invest her surplus cash for a week. She wishes to guarantee maximum returns on her investment. She has three options, each of which can be utilized fully or partially in conjunction with others.
Option A : Invest in a public sector bank. It promises a return of +0.10%.
Option B : Invest in mutual funds of ABC Ltd. A rise in the stock market will result in a return of + 5% while a fall will entail a return of –3%.
Option C: Invest in mutual funds of CBA Ltd. A rise in the stock market will result in a return of –2.5%, while a fall will entail a return of +2%.
What strategy will maximize the guaranteed return to Shabnam?
|100% in option A|
|36% in option B and 64% in option C|
|64% in option B and 36% in option C|
|1/3 in each of the three options|
|30% in option A, 32% in option B and 38% in option C|
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