Answered step by step
Verified Expert Solution
Question
1 Approved Answer
2 st term 2 0 2 3 / 2 0 2 4 Learning outcomes LO 1 - Apply concepts of portfolio construction to real -
st term
Learning outcomes
LO Apply concepts of portfolio construction to realworld practices
LODevelop skills that are specific to public speaking, effective communication, teamwork,
and responsibility.
The Investor Profile
Mr Donothing is a real person. He is years old and single. He does not work. He survives
based on an inheritance of $ million. He is an amphibious person: he spends his time in
cruise lines. He needs $ per day throughout the year for cabin charges and food. He needs
another $ for secretarial services and incidental expenses.
Mr Donothing wants to settle in Jeddah at get married, have a child and buy a house. The
type of house he wants to buy sells today for $ His cash needs would remain
unchanged after he settles on land
In investing his money, consider necessities of life, precautionary needs, need for lumpsum
expenditure in the future, retirement needs, and insurance needs. After investing appropriate
sums to meet some of these needs, if there is money left over, you can consider active
investing: try to beat the market. Two approaches to beating the market are: asset allocation
market timing and identifying mispriced securities
The Task: Portfolio Construction
The objective is to construct a portfolio for Mr Donothing. He hires you to manage his money.
In a team of three members, you will construct a portfolio of securities appropriate to the needs
and preferences of MrDonothing. This task will not only involve security selection, but also
asset allocation via economic analysis, industry analysis, company analysis, etc. In this task
you must cover the first two elements of managing portfolios planning execution, and
feedback You will plan and execute.
The first step will be to construct a policy statement.
POLICY STATEMENT
Once the client's objectives and constraints have been established, you will develop an
investment policy statement IPS the IPS investment policy statement may cover a variety
of issues. For example, the IPS generally details investment goals, objectives, and constraints,
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started