BONUS QUESTION 11 James & Beth are a married couple in their early 50's. They have two children aged 23 and 25 who are both employed. James owns and operates a small business selling curtains and roller blinds and earns $100.000 per annum while Beth earns $70,000 per annum as a Sales Executive in a public listed company. James is risk adverse and has invested the bulk of his savings in the money market which have provided him with average returns of 3.5% pa over the past 15 years. Beth has invested a large part of her savings buying share options allocated to her by the company she works for. However, she is now concerned that she may have too much of her personal wealth invested in the company. They both intend to retire by sixty but are not certain if the returns from their investments and savings will be sufficient for them to do so. James and Beth realise that they need to diversify their investment portfolio and have approached you to advise them on some of their investment decisions. They have summarized their recently acquired and proposed investments below. Investment in Mutual Fund James has invested in ABC Dynamic Allocation Fund (ABCDAF) with Public Mutual. The dynamic asset allocation strategy employed by the fund requires the fund manager to adjust the mix of asset classes to suit market conditions. This is achieved this by allocating its portfolio across blue chip stocks and growth stocks listed on the domestic and foreign markets. James purchased 1,000 units of ABCDAF at a (quoted) price of $20 per unit at the beginning of the 2021. He paid a front-end load of 4%. The securities in which the fund invests are expected to increase in value by 12% during the year. The fund's expense ratio is 1.2% and the management fee is 0.7%. The fund had average daily assets of $2.2 billion at the beginning of the year and sold $400 million worth of shares and purchased $500 million shares during the year. Required: a) Determine James's rate of return on the fund if James were to sell his investment at the end of the 2021. b) Calculate the turnover ratio of the fund c) Calculate other administrative expenses paid by James? d) Advise James if the above fund is suitable for him based on his age, diversification objective and risk tolerance. BONUS QUESTION 11 James & Beth are a married couple in their early 50's. They have two children aged 23 and 25 who are both employed. James owns and operates a small business selling curtains and roller blinds and earns $100.000 per annum while Beth earns $70,000 per annum as a Sales Executive in a public listed company. James is risk adverse and has invested the bulk of his savings in the money market which have provided him with average returns of 3.5% pa over the past 15 years. Beth has invested a large part of her savings buying share options allocated to her by the company she works for. However, she is now concerned that she may have too much of her personal wealth invested in the company. They both intend to retire by sixty but are not certain if the returns from their investments and savings will be sufficient for them to do so. James and Beth realise that they need to diversify their investment portfolio and have approached you to advise them on some of their investment decisions. They have summarized their recently acquired and proposed investments below. Investment in Mutual Fund James has invested in ABC Dynamic Allocation Fund (ABCDAF) with Public Mutual. The dynamic asset allocation strategy employed by the fund requires the fund manager to adjust the mix of asset classes to suit market conditions. This is achieved this by allocating its portfolio across blue chip stocks and growth stocks listed on the domestic and foreign markets. James purchased 1,000 units of ABCDAF at a (quoted) price of $20 per unit at the beginning of the 2021. He paid a front-end load of 4%. The securities in which the fund invests are expected to increase in value by 12% during the year. The fund's expense ratio is 1.2% and the management fee is 0.7%. The fund had average daily assets of $2.2 billion at the beginning of the year and sold $400 million worth of shares and purchased $500 million shares during the year. Required: a) Determine James's rate of return on the fund if James were to sell his investment at the end of the 2021. b) Calculate the turnover ratio of the fund c) Calculate other administrative expenses paid by James? d) Advise James if the above fund is suitable for him based on his age, diversification objective and risk tolerance