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Section C (4 Mark)Vinod has a investment portfolio of Rs.

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Section C (4 Mark)

Vinod has a investment portfolio of Rs. 100000, a floor of Rs. 75000, and a multiplier of 2. So the initial portfolio mix is 50000 in stocks and 50000 in bonds. If stock market falls by 20%, what should Vinod do assuming he is following a CPPI policy?

A.

He should sell stocks and bonds equally

B.

He should sell Rs.10000 of bonds and invest it into stocks

C.

He should sell Rs.10000 of stocks and invest it into bonds

D.

He should buy Rs.20000 of stocks to average

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