Amber Chua born 14 December 1981, is a Malaysian model, actress, TV host and brand ambassador. Amber started her own company Amber Creations in mid-2009 and a modelling school Amber Chua Academy in August 2010. She is a married woman who retired with approximately RM1,800,000 in assets. Amber earns a small amount of income from a part-time job, receives Social Security payments, and collects income from investments. Amber owns a home and leads a modest lifestyle. Amber needs to decide how to invest her assets and set a realistic spending policy. The following exhibit lists key data to help answer these questions and frame the problem:

ASSETS:-

Total equity - RM405,000

Total Bonds - RM225,000

Home - RM 800,000

Jewelry - RM 320,000

Savings - RM 50,000

Income & Expenses

Assets - RM 29,000

Other income - RM 26,000

Expenses - RM64,500

1. Explain what type of information is needed in order to advise her effectively. Based on the limited information, justify whether Amber appears to be a sophisticated investor.

(5 marks)

2. Recommend what needs to be done to determine the best course of action for her assets. (5 marks)

3. Give your opinion on how much risk (consider one definition) is Amber willing to assume, both financially and emotionally. Suggest the right investment horizon for Amber.

(5 marks)

4. Explain how should the above determinants influence the recommended asset allocation and asset class selection. Propose a mix of stocks, bonds, and cash for Amber.

(10 marks)