Jane Smith’s Investment Decision Finance Analysis Case

FNCE2280 Investment Decision Assignment (15%)

 

1

Download and read Jane Smith’s Investment Decision (A). Answer the following questions.

1. Given the limited information provided in the case, assume that you are Jane Smith, and complete the Sample Investor Questionnaire. Using the results of the questionnaire, describe the investor profile and asset allocation that are appropriate for Jane. Which asset mix proposal is most consistent with the results of the questionnaire?

2. Using information provided in the case, the results of your questionnaire, the additional

readings provided for this assignment, and the chapter 1 reading, develop an Investment Policy Statement for Jane Smith.

3. Calculate the projected total return for portfolio “A”. Show your calculation. Critique the

appropriateness for Smith’s portfolio of the asset mix in “A”. Explain three reasons as to why portfolio “A” may be appropriate or inappropriate.

4. Consider the following table:

 

B C D E

projected total return 9.85% 9.95% 8.83% 10.20%

expected standard deviation 9.75% 11.00% 8.50% 10.00%

projected return less 2 standard deviations -9.65% -12.05% -8.18% -9.80%

Which portfolio(s), “B” through “E”, meet Smith’s return and risk objectives? Which portfolio mix (“B” through “E”) would you recommend? Explain at least three reasons as to why you would recommend this portfolio.

5. Construct a strategic asset allocation policy for the portfolio you recommended. Using

information provided in the case, the additional readings provided for this assignment, and the chapter 9 reading, explain at least three factors that you would need to consider when developing a strategic asset allocation policy. A sample strategic asset allocation policy is provided below.

 

Asset Class Policy Weight Upper Limit Lower Limit

Government Bonds 10% 15% 5%

Corporate bond 10% 15% 5%

Canadian Equities 20% 30% 10%

U.S. Equities 30% 40% 20%

International Equities 20% 25% 15%

Emerging Market Equities 10% 15% 5%

TOTAL 100%

 

 

 

FNCE2280 Investment Decision Assignment (15%)

2

SUBMISSION REQUIREMENTS A title page is required. The title page should ONLY include the following information in the following order: the name of your assignment, your first and last name, institution name, course name, course number, my name, and date.

Complete the assignment in a question/answer format. Your assignment may be submitted as either a WORD document or PDF. No other format is acceptable. The length should not exceed 1500 words (approximately 6 pages double-spaced, Times New Roman, 12-point font, exclusive of title page and exhibits). Page numbers should be placed in the centre footer position. Page 1 will be the 1st page after the title page. A table of contents is not required.

Question 1 is completed from the perspective of Jane Smith. The remaining questions are

completed from your perspective. Submit your assignment in the assignment dropbox provided

on the moodle site for the course. Also, for question 1, provide the table where you calculated

your recommended asset allocation. For example:

Spelling and grammar are always important.

A penalty of 20% per day will be assessed for each day the assignment is past due.

DUE DATE: Friday, June 4th, 2021