Cryptocurrencies Risk Tolerance - Finance Assignment Help

Assignment Task

Risk tolerance investment portfolios are categorized into conservative portfolio, Balanced portfolio and Growth portfolio.

Conservative portfolio is designed for the investors who have low risk tolerance and wants income with the protection of their fund against inflation. Conservative portfolios are heavily weighted with fixed income bearing securities (70-80 percentage) and some equities (20-30 percentage). For the backtesting the risk and return inclusive of cryptocurrencies the conservative portfolio will hold 60 percentage fixed income securities, 25 percentage equities and 15 percentage cryptocurrencies keeping the low-risk strategy in mind.

A balanced portfolio is created for investors who are ready to take medium investment risk for higher return. Balanced portfolio provides both income and capital appreciation and usually weighted 40-50 percentage fixed income securities and 50-60 percentage equities, here for the testing a balanced portfolio including cryptocurrencies will weigh 30 percentage fixed income securities, 40 percent equities and 30 percentage cryptos.

A growth portfolio takes higher risk by investing more on equities and less on fixed income securities. Growth portfolio is more volatile and expected to generate higher returns, while testing the growth portfolio allocation will be 15 percentage fixed income securities, 60 percentage equities and 25 percentage cryptos.

Results should indicate

1. Ho: There is no difference in Risk of the portfolios when a percentage of cryptocurrencies were introduced as an additional class of assets.

H1: There is a difference in the in Risk of the portfolios when a percentage of cryptocurrencies were introduced as an additional class of assets.

2. Ho: There is no major difference in Return of the portfolios when a percentage of cryptocurrencies were introduced as an additional class of assets.

H1: There is a huge increase in the in Return of the portfolios when a percentage of cryptocurrencies were introduced as an additional class of assets

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