A portfolio has a floor value of $4 million, a market value of $7 million, and a multiplier of 1.5. The portfolio will be 100% invested in stock when the portfolio value is
A) $12 million
B) $14 million
C) $16 million
D) $18 million

Question

Quizplus · Accepted Answer

The formula for the portfolio value where it is 100% invested in stock is: Floor value + (Multiplier * (Market value - Floor value)). Plugging in the values: $4 million + 1.5 * ($7 million - $4 million) = $4 million + $4.5 million = $8.5 million. Since the portfolio value is already $7 million, it will be 100% invested in stock when it reaches $12 million.

A Portfolio Has a Floor Value of $4 Million, a Market