FISV 6056 - Investment Analysis & Portfolio Management

Case Study # 1

Questions:

A. Formulate the return objective for Jorge Andres' IPS. Calculate the after-tax nominal rate of return that is required to achieve this objective for his first year of retirement.

B. Describe Jorge Andres' as below average, average, or above average with respect to each of the three components of the risk objective in his IPS:

i. Ability to take risk

ii. Willingness to take risk

iii. Overall risk tolerance. Justify each of your responses with one reason based on the case.

C. Formulate each of the following constraints for Jorge Andres' IPS

i. Time horizon

ii. Liquidity requirements

iii. Tax concerns

D. i. Identify one bias associated with Jorge's investment in company stock and the problem it can lead to in a portfolio. ii. Identify and describe one bias associated with Jorge's view on the economy