Guidelines

Case Scenario A young couple need your help to build their retirement fund. They recently received a tax free lump sum for $100,000 as their wedding gift. They are about 30 years each and have enough discretionary income no to worry about the market fluctuations in short term. Their current combined annual salaries is about $250,000. They want you to construct an investment portfolio for their retirement.

Investment Goals and Risk Tolerance Identify and analyze your subject risk tolerance based on the given scenario. Critically argue the possible risk tolerance metrics you may use. How do you classify your subject risk tolerance and why? Argue and present evidence to support your points. Remember your findings should be the basis for your subject portfolio risk or standard deviation.

Asset Allocation Discuss and compare different asset classes. Critically compare and contrast diversified and non-diversified investment approaches. Critically, discuss and analyze the benefits and limitations of MPT. Using Modern Portfolio Theory (MPT), identify a proper asset allocation for your subject. Discuss and graph Efficient Frontier.

Asset Selection, Fundamental Analysis, and Technical Analysis You could only use five assets for your subjects portfolio. Using Fundamental Analysis and Technical Analysis, decide which asset would you invest? What price would purchase the assets?

Fundamental Analysis may include valuation based on DDM, DCF, Residual Income Model (RIM), and Market Multiples.

Technical Analysis may include chart patterns along with at least two technical indicator, but no more than four technical indicators.

Portfolio Performance

Compare and contrast different portfolio performance measurements. Analyze and calculate the following metrics for your subject portfolio:

-Annualized Return (APY)

-Standard Deviation

-Beta

-Sharpe Ratio

-Alpha or Jensen Ratio

-Treynor Ratio