---
# System prepended metadata

title: "\U0001F3AF Bonus Assignment — Portfolio Design Exercise"

---

# 🎯 Bonus Assignment — Portfolio Design Exercise

You have just learned the three key ingredients for **portfolio construction**:

1. **Expected Return**
2. **Standard Deviation (Risk)**
3. **Correlation** between assets

Now, you will use this information to design a simple **three-asset portfolio**.

---

## 📊 Available Assets

| Asset | Expected Return (Yearly) | Std. Deviation | Correlation with US Equity | Correlation with US Bond | Correlation with Global Equity |
|:------|:-------------------------:|:---------------:|:---------------------------:|:-------------------------:|:-------------------------------:|
| **US Equity Index** | 8% | 20% | — | -0.4 | 0.7 |
| **US Bond Index** | 4% | 10% | -0.4 | — | -0.6 |
| **Global Equity Index** | 10% | 30% | 0.7 | -0.6 | — |

---

## 🧮 Instructions

Please follow the three steps below to design your portfolio.  
(You may answer **in English or Chinese**.)

### Step 1. Choose your target expected return
Decide on a yearly expected return goal for your portfolio.  
For example:  
> I aim for an expected return of **6.5%**.

---

### Step 2. Choose your allocation
Decide your percentage weights among the three assets (the weights must sum to 100%).  
Example:

| Asset | Weight |
|:------|:------:|
| US Equity Index | 25% |
| US Bond Index | 50% |
| Global Equity Index | 25% |

Expected portfolio return =  
$$ 0.25 \times 8\% + 0.50 \times 4\% + 0.25 \times 10\% = 6.5\% $$

---

### Step 3. Explain your reasoning (3–5 sentences)
Briefly describe **why** you chose this allocation.

You may discuss:
- Risk–return tradeoff  
- Diversification  
- Correlation between assets  
- Your tolerance for volatility  

---

## 📝 Submission

- Please prepare a **short written answer (half to one page)**.
- Export your answer as a **PDF file**.  
- **Upload your PDF to TronClass** under this assignment.

---

## ✅ Your PDF should include

1. Your **target expected return**  
2. Your **chosen weights** (sum to 100%)  
3. Your **short explanation**

---

✨ *This exercise helps you think about how to balance return, risk, and diversification — the foundation of modern portfolio theory.*
