Mr. A. Graham is a 25-year-old college graduate who holds a steady job as a valued employee in a blue-chip company. He is married with two young children. In the few years that he has been working he has built up two ($2 m) cash reserves in the bank. He also has adequate insurance coverage. Mr Graham has a moderate to high risk profile depending on the type of investment. His current short term and long-term goal is to acquire a house and car and build a long term retirement fund and college fund for his children.

a. Formulate and justify an investment policy statement for each investor setting forth the appropriate guidelines within which future investment actions should take place. Your policy statement should encompass all relevant objective and constraint considerations.

b. Recommend and justify a long-term asset allocation that is consistent with the investment policy statement you created in Part a. Briefly explain the key assumptions you made in generating your allocation.

NB. An assessment of each investor current situation should be given in order to develop an appropriate investment strategy.

Your policy statement for your client should address the following specifics

Objectives of the investment strategy.

• Return requirement
• Risk Tolerance

Constraints

• Time Horizon
• Liquidity requirement.
• Taxes.
• Legal and regulatory

Unique circumstances